Vanke has sold another high-quality commercial project in Shanghai.
According to information from Tianyancha, on September 4th, Shanghai Songjiang Impression City's operating entity, Shanghai Lishi Enterprise Management Co., Ltd., underwent a change in equity. Shenzhen Yintai's shareholding ratio decreased from 50% to 2%, while RECO YIYUAN PRIVATE LIMITED's shareholding ratio increased from 50% to 98%.
Among them, RECO YIYUAN PRIVATE LIMITED is a subsidiary of GIC, the Singaporean government's investment company; Shenzhen Yintai is a subsidiary of Vanke. This also means that after Vanke transferred 48% of its equity in Songjiang Impression City to GIC, the latter has become the owner of Songjiang Impression City. Industry insiders engaged in large-scale asset transactions in Shanghai have stated that the specific price of the transaction has not been disclosed to the public because it is a transaction between cooperative shareholders, and there is a confidentiality agreement.
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Lu Qiang, Executive Director of the Capital Markets Department of Jones Lang LaSalle East China, told Yicai that GIC's increase in Songjiang Impression City is the second time this year that it has made a move in Shanghai's commerce, and it is also the third large-scale commercial transaction involving foreign capital this year. In 2024, when the overall proportion of large-scale foreign mergers and acquisitions is very low and the number of transactions is in the single digits, this highlights the special preference of foreign capital for large-scale commerce in Shanghai.
The project was developed in cooperation with Vanke and GIC. According to "Shanghai Songjiang," the first phase of Songjiang Impression City opened in November 2021, with a construction area of 155,000 square meters. Zhang Yuming, the person in charge of Songjiang Impression City, introduced that in 2023, the passenger flow of Songjiang Impression City exceeded 11.2 million person-times, with an average daily flow of more than 30,000 person-times, and the sales volume reached 2.23 billion yuan.
This is also one of the most profitable commercial projects under Vanke. Since its opening, it has been among the top in Vanke's major commercial projects.
According to Vanke's financial reports, in 2022 and the first half of 2023, the revenue of Shanghai Songjiang Impression City was approximately 163 million yuan and 96.1943 million yuan, respectively, with occupancy rates of 94.42% and 98.31%, respectively. Among the top ten commercial projects publicly disclosed by Vanke, they were ranked 9th and 7th, respectively, in Shanghai, only behind Qibao Vanke Plaza and Nanxiang Impression City MEGA. Industry insiders estimate that the rental income of Songjiang Impression City in 2024 is expected to exceed 200 million yuan.
It is precisely because of the good performance that in late March of this year, the second phase of Songjiang Impression City broke ground, with a total investment of about 3.4 billion yuan and a total construction area of about 269,000 square meters, including MEGA-level shopping centers and hotel formats, which is expected to be delivered in 2027. After the complete development, the shopping center area of Songjiang Impression City's first and second phases will reach 405,000 square meters, becoming the largest single commercial complex in Shanghai.
So far, Vanke has quickly sold three important commercial projects located in Shanghai within 2024. The first two times they were put on the shelf were the two most profitable commercial bodies under its banner: Nanxiang Impression City MEGA in Jiading, Shanghai, and Qibao Vanke Plaza in Minhang, Shanghai.
Among them, the buyer of the Nanxiang Impression City MEGA project is also the project's partner GIC. In late August 2020, this complex with a total construction area of about 337,000 square meters was opened. It is currently the largest single commercial shopping center in Shanghai, ranking first in the scale of commercial projects that Vanke has opened, and it is also the first project of the MEGA product line to be implemented.Between 2021 and the first half of 2023, Nanxiang Impression City MEGA achieved operating revenues of 330 million yuan, 329 million yuan, and 193 million yuan, respectively, with occupancy rates of 99.23%, 97.75%, and 99%, ranking at the forefront among the top ten commercial projects publicly disclosed by Vanke, and second only to Qibao Vanke Plaza in Shanghai.
Such a "cash cow," in July of this year, Vanke sold 48% of the shares of Nanxiang Impression City MEGA to GIC. After the transaction, GIC holds 98% of the project's equity, with the remaining 2% of the interest held by Vanke. Although the specific price of this transaction has not been disclosed, market sources indicate that the transaction for 48% of the equity was in the range of 2 billion yuan. Vanke's management has stated that they will continue to operate the commercial complex.
Another significant commercial project sold by Vanke within the year, Qibao Vanke Plaza in Shanghai, was also developed in collaboration with GIC. Completed in 2016, it is known as the most profitable commercial project under Vanke.
According to Vanke's disclosure, as of the end of June 2023, the occupancy rate of Qibao Vanke Plaza was approximately 97.71%, with a revenue of 213 million yuan. It ranked first among the top ten commercial projects managed and operated by Vanke (sorted by operating revenue) and is the most profitable project in Vanke's commercial system, with a total annual customer flow of 21.5 million people in 2023.
However, GIC did not acquire Qibao Vanke Plaza. In February 2021, GIC sold its 50% stake in Qibao Vanke Plaza to Link REIT. Link REIT also became the successor to Vanke's equity.
On February 20th of this year, Link REIT publicly disclosed that it had acquired the remaining 50% stake in Vanke's Qibao Vanke Plaza in Shanghai for a total consideration of approximately 2.384 billion yuan, achieving full control over the project and becoming its new owner, with Vanke exiting the project.
It is worth mentioning that, according to Link REIT's disclosure, as of the end of January this year, the valuation of Qibao Vanke Plaza was 7.06 billion yuan, while the transaction agreement price was 5.2 billion yuan. This is equivalent to Vanke selling this flagship shopping mall at a 30% discount. In June of this year, the shopping mall was renamed to Shanghai Qibao Link Plaza.
CRIC believes that Vanke has disposed of mature commercial office assets such as Qibao Vanke Plaza and Nanxiang Impression City at appropriate prices within the year, recycling more funds and reducing financial pressure, aiming to "slim down" in exchange for liquidity.
Vanke's Board Chairman Yu Liang had already clearly stated at the 2023 annual shareholders' meeting that Vanke would launch a "slimming down" plan and had formulated a comprehensive package of measures for slimming and strengthening. Since 2024, in addition to the three important commercial projects in Shanghai mentioned above, Vanke has also sold high-quality assets such as the Shenzhen Bay Super Headquarters Base.
At the mid-term performance meeting held at the end of August, Vanke's management disclosed that, as of the end of July, Vanke's bulk transactions had a cumulative signed amount of 20.4 billion yuan, covering 31 projects including offices, commercial, hotels, and apartments, which can achieve the 2024 annual asset transaction target in the "comprehensive package" plan. At the same time, by promoting bulk transactions and resource revitalization, Vanke recovered more than ten billion yuan in the first half of the year.Vanke's management has stated that they will accelerate the pace of bulk transactions and equity disposals in the second half of the year. Over the next four months, Vanke's bulk transaction efforts will continue along the established path, with 19 projects currently under negotiation. In addition to commercial, office, and residential properties, one of them is an educational asset.
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