Last year, the volume of overseas M & A transactions fell by nearly 50%.
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- Source: Dongyang Information Network
Summary: Generally speaking, overseas mergers and acquisitions are rational. Developers acquiring overseas residential properties under construction through overseas mergers and acquisitions will be able to develop residential land plots. To a certain extent, they can avoid the risks of local policies and regulations, and replace them with overseas transactions. The landmark property in the core area of the commercial city in the developed regional center is a scarce property.
In recent years, based on various reasons, housing companies that are too large have set their sights on overseas markets, and frequently make efforts in overseas markets such as Australia, the United States and the United Kingdom.
A reporter found from a research report by PricewaterhouseCoopers that in the past three years, from 2015 to 2017, the number of Chinese real estate companies' overseas M & A transactions was 36, 86 and 46, respectively. Among them, 2016 was the peak period for overseas mergers and acquisitions, which declined to last year, and the number of overseas mergers and acquisitions fell by 47% year-on-year. This is because housing companies involved in overseas mergers and acquisitions have gradually returned to rationality.
"Variations" in overseas mergers and acquisitions
PricewaterhouseCoopers data shows that the number of overseas real estate M & A transactions decreased by nearly 50% in 2017, but the transaction value exceeded 400 billion US dollars, maintaining a growth of more than 400%, and the average transaction volume also increased significantly. The report shows that the increase in the transaction amount is mainly because I was willing to take the lead in the acquisition of Blackstone's European logistics real estate agency Logicor in June last year for a $ 13.8 billion transaction.
In addition, Vanke formed a consortium with Houpo, Gaofeng Capital, SMG, and Bank of China Group Investment Co., Ltd., and participated in the privatization of GLP listed on the Singapore Exchange, becoming the largest shareholder of GLP. The final transaction amount exceeded 10 billion US dollars. . As a leading provider of modern logistics facilities in China, Japan, the United States and Brazil, ProLogis has become a springboard for Vanke to join the logistics real estate industry.
The reporter combed and found that the overseas mergers and acquisitions of housing companies were mainly concentrated in the core cities of the United States, Malaysia, Singapore and the United Kingdom, with the long-term profitability of developing residential and high-rise apartments and acquiring held properties.
It is worth noting that among the types of real estate overseas mergers and acquisitions in the past year, logistics and land M & A transactions accounted for the largest proportion, and overseas investment in core properties or residential sectors was relatively active.
The above PricewaterhouseCoopers report shows that according to the classification of property use, in 2017, overseas property acquisitions by commercial real estate companies and land development properties accounted for the highest proportion, reaching 41% and 33% respectively.In addition, logistics, residential and hotel properties Housing companies favor. Specifically, according to not all statistics, R & F Real Estate's acquisition of Australian Central Gardens apartment building last year is a pending construction project, and it took over the development of Wanda's London one project. The development phase is also expected to be completed in 2021. At the Nine Elms Square in London, properties acquired overseas have all taken centre stage.
Analysts believe that in general, overseas mergers and acquisitions are rational. Developers acquiring overseas residential properties under construction through overseas mergers and acquisitions will be able to develop residential land plots. To a certain extent, they can avoid risks in local policies and regulations and switch to overseas transactions. Most of the landmark properties in the core commercial city of developed regional centers are scarce properties.
Need to reduce debt after mergers and acquisitions
Wanda, Vanke, Greenland, Poly, Zhonghai, Country Garden and other large and medium-sized housing companies have selected overseas real estate in recent years. The second-responsibility companies have a very large volume layout. Overseas investment by housing companies has begun to move from shallow to deep. It began to construct apartment buildings and tourist resort communities, shifting towards the construction or acquisition of urban complexes. In the real estate sector, overseas investment in real estate by large housing companies has become a trend.
Yan Yuejin, Research Director of the Think Tank Center of the E-House (Blog) Research Institute, said to reporters that in fact, active overseas mergers and acquisitions are a model that is a bit painful for the strategic expansion of housing companies. Overseas mergers and acquisitions can help avoid the risks brought by the domestic market regulation. It is just that I acquire global recognition through the acquisition of landmark projects in overseas markets, which is a great benefit for brand expansion.
In August last year, the General Office of the State Council transmitted the “Notice on Further Guiding Opinions on Further Guiding and Regulating the Direction of Overseas Investment”, which requires that domestic enterprises be restricted from conducting overseas activities that are inconsistent with the state ’s foreign policy of peaceful development, a mutually beneficial and win-win opening strategy, and macroeconomic control policies. Investment, including overseas investment in real estate, hotels, cinemas, entertainment, sports clubs, etc.
In fact, the Wanda Group , which has continuously sold overseas assets in the past year, may become a typical case for many real estate companies in its overseas M & A path.
Wanda, which had once made a big purchase overseas, began to sell off from last year in order to reduce overseas investment and debt. According to not all statistics from reporters, Wanda has sold the Madrid project in Spain, the two major projects in Australia, and the ONE project in London, UK. So far, Wanda Group's eight major overseas property investment projects have only occurred in Wanda Vista Tower in Chicago, USA and the Beverly Villa project in Los Angeles. R & F Properties is the buyer of the London project and the two major Australian projects. Interestingly, Wanda had intended to take over the site of the Nine Elm Square in London, England in June last year, but in the last step, Wanda abandoned the development of the site and was eventually jointly managed by R & F Real Estate and Yangyu Land.
Wanda Group has continuously cleaned up overseas assets acquired through mergers and acquisitions in the past year. Lu Benwei (blog), chairman of Wanda, has clearly stated at the 2017 annual meeting that he will gradually pay off all overseas interest-bearing liabilities. "Now relatives, relatives and friends decide to pay off overseas debts, and selling half of the assets will pay off all the debts."
In the environment where housing companies continue to penetrate overseas, Longhu Group, which has always been cautious, looks different. Long Lake Group CEO Shao Mingxiao once spoke to reporters and other media about the "overseas investment" question report at the press conference. He said that in which years Longhu has invested overseas, it is often rooted in the homeland, and Longhu's investment logic is based on assets and liabilities. Table, too large plus leverage to achieve growth.
Yan Yuejin admits that, as the threshold for overseas investment continues to increase, overseas M & A risks under high debt are very high. Housing companies need to pay attention to operational compliance when going overseas for M & A and project development. Together, they need to study the different development capabilities of overseas markets. Prevent entry after the overheated market is over, so as not to affect the returns on overseas investment.
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