In 2021, the uncertainty of the real estate industry will become more intense, the policy will become more strict, the financing environment will continue to tighten, and real estate investment will face new challenges.
As an important carrier of the financial flank in the "one body and two wings" strategy of Gemdale Corporation, relying on the strong platform of Gemdale Corporation and the core competitiveness of WINS Investment , WINS Investment has always maintained steady growth and industry recognition in the field of real estate finance for many years, which also fully reflects the solid strength of Gemdale Corporation 's diversified layout. So how does WINS Investment carry out real estate financial innovation in the changing market environment? How to transform and upgrade its diversified layout? How to carry out effective operation management and risk control…
With this series of questions, CAIC interviewed Xu Yafeng, President of WINS Investment, who shared the successful experience and unique opinions of WINS Investment.
- The following is an excerpt from the interview -
Investment model
CAIC: In recent years, under the multiple influence of policies such as "centralized land supply" and "three red lines", how has WINS adjusted its investment strategy to adapt to the new market situation, and what explorations has been made by WINS in the field of real estate financial innovation?
Xu Yafeng: Whether it is the release of "centralized land supply", "three red lines", or the release of other regulatory policies, the government hopes to prevent the blind development of the industry. As an enterprise, we should control the impulse of rapid development and maintain the strategic policy of steady development. The development mode of rapid scale expansion and continuous use of high leverage is gradually withdrawing from the historical stage in the existing environment. Enterprises should think in another position, start again, focus on cultivating their internal skills, cultivate their own investment ability and operation ability, tap their own internal potential, and improve their benefits through management, so as to promote the overall development quality. At present, we are still attempting and exploring on this road.
CAIC: The layout of logistics real estate and stock property, and the transformation and upgrading of commercial real estate have become the new trend of real estate private equity fund investment. What are the investment opportunities for urban renewal that WINS is optimistic about at present?
Xu Yafeng:On the one hand, in the previously mature business of residential development investment, including equity investment, small share trading, or investment agent construction, WINS will still maintain steady development and maintain a reasonable business growth. On the other hand, we will increase the urban renewal fund, especially the investment in industrial parks. Whether investing in industrial funds or making direct investment in industries, these contents are more in line with the overall investment strategy of Gemdale Corporation, and also in line with the national policy guidance of rejuvenating the country through industry and science and technology. Recently, WINS has just invested in the industrial park project located in the core area of Guangzhou Science City, with a total construction area of about 150,000 square meters. One major feature of the project is that the industrial layout is positioned in the hot fields in line with the current economic development trend, such as biomedicine, electronic information and artificial intelligence, as well as the regional industrial layout orientation.
CAIC: Financial institutions pay more and more attention to the construction of risk control. What effective measures has WINS taken in risk control and what practical experience can be shared with us?
Xu Yafeng:On the one hand, WINS has rich experience in the field of residential development investment, whether it is small stock trading or investment + agent construction. We can give full play to the ability of active management, cooperate with the resources of various relevant business chains of Gemdale Corporation, give full play to the advantages of brand ability, financing ability and trading ability, and effectively control the risk of residential development. On the other hand, for the held projects we invest in, we should pay more attention to the continuous operation ability and multi-dimensional investment strategy. For example, for the investment formats of industrial parks and community businesses that WINS focuses on, we can make use of advantageous resources to give full play to the operation ability of Gemdale Industrial Company and the business management ability of Gemdale Properties and Investment, improve the use efficiency of the building itself through the transformation and construction of the physical form of assets, and provide comprehensive enabling services for the operation of assets, so as to realize the mining and improvement of asset value and obtain the recognition of customers, and finally achieve the full improvement of return on investment. For example, the industrial park projects we invest in, such as Hangzhou Gemdale Viseen Science and Technology Park, Shanghai Gemdale Viseen No. 8 bridge, Hangzhou Gemdale Viseen No. 8 bridge, and Community Commerce Shanghai Gemdale –Oopcity, basically adopt this logic.
CAIC: In order to achieve long-term effective development, private equity investment funds of real estate need to attract more high-net-worth customers to enter this track. What are the focuses of attention for these customers, what are the comparative advantages of WINS, and what preparations should be made for this?
Xu Yafeng:In our previous residence business, our core capital sources were mainly banks, trusts and other financial institutions. WINS Investment began to explore the business of RMB real estate fund as early as ten years ago. Many investors have maintained long-term and stable cooperative relations with us. At present, in equity projects, on the one hand, our investors are also quite professional in this field and will have their own judgment on each of our projects. On the other hand, the historical performance of WINS Investment has also been trusted and recognized by most investors, and the capital problem has been solved. From the perspective of policy supervision, debt funds will face great challenges, but active investment in real estate equity projects is still encouraged within financial institutions. In addition, the current urban renewal projects such as industrial parks we invest in have a long investment cycle. We will basically make investment according to the calculation of more than five years, so our requirements for investors are higher. We may also focus on the funds of some institutions, including insurance funds, mainly because professional investors have a stronger recognition of the investment business model and cycle tolerance of such projects. This is also our key development direction in the future.
CAIC: With the gradual opening of China's capital market, what funds do you think will enter the field of real estate equity investment in the future?
Xu Yafeng:From the perspective of international capital, they have always been optimistic about the Chinese market. The appreciation of RMB is one of the factors to be considered. The key is the driving force of China's own economic growth, especially the performance of the test of the epidemic. China's response to the epidemic can be said to be the most successful case in the world. International capital is optimistic about the potential of China's sustained economic growth. In the future, there will be some international public and private funds, including long-term pension funds and endowment funds, which may enter the field of real estate equity investment.
Asset operation
CAIC: Through what mode does WINS carry out operation and management to its existing investment projects to improve their internal value?
Xu Yafeng:For the original residential project, we have a mature asset management team. Based on more than ten years of training, our asset management team has rich experience and strong ability of operation and management. We combine the system of project site asset management and the system of asset management supervision to implement close and quantifiable control over investment projects at different stages. At present, in the industrial park and community commerce, we will also involve new fields such as office and incubator in the future. We will cooperate with Gemdale Corporation Industrial Company in the operation ability of various professional business lines and seek to cooperate with our brother companies within the group. On the one hand, we coordinate and give full play to the capabilities and advantages of the Industrial Company of the Group. On the other hand, we also exercise our own ability in these projects and constantly improve the cooperation mode.
CAIC: Can you share with us some successful projects that WINS has operated in various fields?
Xu Yafeng: Industrial parks and community businesses are the investment formats that WINS is currently focusing on.
With the further upgrading of China's industrial structure and the opportunities brought by the national policy of industrial rejuvenation, Gemdale Corporation is gradually increasing the development of industrial real estate in recent years, and WINS Investment has also accumulated some experience in industrial park investment. From the early Shanghai No. 8 bridge project, which is the representative of the domestic "asset light" cultural and creative industrial park, to the current Shanghai Gemdale Viseen No. 8 Bridge (Binjiang Park), Shanghai Gemdale Viseen No. 8 Bridge (Bansong Park), Hangzhou Gemdale Viseen Science and Technology Park, Hangzhou Gemdale Viseen No. 8 bridge, etc., are all successful cases of WINS's investment in industrial park projects. Combined with the local industrial development strategy of the projects, these projects not only improve and enhance the image of the city and region, but also provide strong support for local industrial upgrading and economic growth. For example, a major feature of the project of Shanghai Gemdale Viseen No. 8 Bridge (Binjiang Park) is that it is different from the standardized traditional environment such as office buildings and has more flexible display space, and is particularly recommended to display office enterprises in design related fields. In the future, it will form a new gathering area for office in Shanghai Binjiang, together with Xuhui Binjiang and World Expo Binjang. Another example is Hangzhou Gemdale Viseen Science and Technology Park, which introduces the concept of ecological office and creates a rare single-family yard/villa office space in a private three-dimensional garden style in Smart Network Valley Town, so that enterprise employees can enjoy close contact with the nature when working. In addition, the project focuses on the digital industry and enables the future development of the region and the city. Furthermore, the recent industrial park project in the core area of Guangzhou Science City jointly invested by WINS Investment and Gemdale Properties and Investment Co., Ltd., with a total construction area of about 150,000 square meters, caters to the regional market development and company strategy. The project is held and operated with the main industrial positioning of biomedicine, electronic information and artificial intelligence, in line with the current economic development trend and regional industrial layout orientation.
Renderings of Hangzhou Gemdale Viseen Science and Technology Park
In the field of community commerce, we see the strong demand of residents around the community in the regional market segment for daily consumption, culture and entertainment, interest cultivation and comprehensive services. Therefore, we hold that this field has a certain room for improvement and value enabling potential. Based on 17 months of upgrading and transformation, the "Gemdale-Oopcity" invested by us in Shanghai has been officially launched in December last year. So far, it has become a community shopping center with the service theme of children's education, leisure and entertainment, which has brought great convenience and brand-new service experience to community owners in this area.
Aerial view of Gemdale Oopcity (Shanghai Kangjian Plaza)
From the perspective of investment logic, on the one hand, because we have solid strength in capital integration ability, we mainly focus on acquisition in the early stage of the project. On the other hand, by cooperating with the operation capacity of Gemdale Corporation Industrial Company in industrial parks, businesses, commercial offices, apartments and other professional lines, the building itself is transformed and improved, and the asset value is excavated and improved through the comprehensive empowerment of asset operation. In the future, ABS and CMBS are the more mature models we have adopted in the past. On the other hand, we can draw on the experience of current infrastructure REITs. We also hope to try the exit mode of REITs in the field of industrial parks in the future.
Asset Securitization
CAIC: The first batch of publicly-offering REITs has aroused a warm response in the market. Would you like to share your views on the future development direction of REITs?
Xu Yafeng:the successful issuance of the first batch of public-offering REITs is much-expected on the domestic market. As a very important step, it marks that we can really guide the funds from the capital market into the underlying assets. By giving full play to the allocation ability of the capital market and introducing funds into the core underlying assets, we can help the market reduce leverage and alleviate the pressure of high liabilities, including the industrial parks and logistics covered by the first batch of infrastructure REITs, which are also the underlying asset formats we pay attention to, and which will provide us with case reference and reference significance. On the other hand, due to the transparency of the capital market and the standardization of capital transactions, the successful issuance of the first batch of public-offering REITs will play a very far-reaching guiding role in the whole capital market and even the investment market. In the future, held assets will be priced by the capital market before the current income value of the assets is deduced, so that the assets can be priced. With the success of the first batch of pilot projects, good achievements have been made in terms of asset quality and subscription, and the overall scale of public REITs will continue to expand in the future.
CAIC: What explorations and attempts has WINS made in the field of REITs by opening up the traditional model of real estate private equity funds and asset securitization products?
Xu Yafeng:First of all, WINS Investment will mainly make some early PE investments. The project first needs a certain business process to achieve stable operation and sustainable capital return. Therefore, our focus is now placed on the first step, that is, to obtain the project through PE investment, and then help the project to transform and enhance itself and add its value through efficient operation capacity, so as to realize stable operation and stable cash flow.
Second,WINS Investment will continue to pay attention to the operation of the underlying assets of the invested project. In the future, we will consider the combination with REITs at an appropriate time, exit from the capital market, open up the public offering market when the policy allows, and turn it into a stable income product that the public can buy. This is the operation strategy and direction we hope to run on the public-offering REITs track in the future.
Prospect
CAIC: Recently, real estate enterprises have difficulty in bank financing, and the refinancing scale in the capital market has been shrinking. What development opportunities and challenges do you think will be brought to the field of real estate equity funds in this context?
Xu Yafeng:At present, from the perspective of the whole real estate industry, there are great pressures and challenges on the capital side, project side and policy side. In such an industry environment, relevant enterprises in the industry are prompted to seek transformation through self-upgrading and business transformation. External pressure has also become the driving force to promote our self iteration. In the future, WINS Investment will not only make residential investment, but also increase investment in urban renewal, including industrial parks and other holding projects. In the past, the industry generally believed that such projects had a long cycle, low short-term return and difficult operation. However, we believe that this is a new development path full of opportunities. Through such projects, WINS Investment will operate long-term projects with long-term funds to achieve sustained and stable return on investment. We can see that internationally mature capital markets such as the United States, Hong Kong, Singapore and Japan rely more on held assets to achieve a higher project volume and scale, which also provides us with a good reference. In the future, we also hope to have a more standardized and international capital market, which will bring us new development opportunities.
CAIC: This year marks the 20th anniversary of the listing of Gemdale Corporation. WINS’s "investment + agent construction" mode in collaboration with Gemdale Corporation has made outstanding contributions to the diversified development of Gemdale Corporation. In what fields will WINS play an important role in the future?
Xu Yafeng:As an independent financial business segment of Gemdale Corporation, WINS Investment can serve the overall strategy of the Group and develop in a coordinated manner. In the past, we maintained effective linkage with the Group in mature business fields such as real estate development, equity investment and investment + agent construction, and achieved good results. This year marks the 20th anniversary of the listing of Gemdale Corporation. In the new development period, Gemdale Corporation has put forward the development strategy – provider of comprehensive urban service and developer of new urban areas of industry-city integration. In the field of industry-city integration, we will seek deeper linkage with the Group, give full play to our energy in the capital market, and contribute to the overall development of the Group. Our goal is still to be the most valuable international provider of real estate financial service. In addition to the original residential owners, we hope to add more elements of urban renewal and industrial investment, and continue to move forward on the road of diversified investment and development.
Steady development strategy, innovative diversified investment strategy, professional ability of asset management and operation management and solid resource support will help WINS investment overcome various difficulties on the new track and create a new benchmark for international real estate financial services.
Display of some projects
The Industrial Park in the Core Area of Guangzhou Science City
With a total construction area of about 150,000 square meters, this project caters to the regional market development and company strategy, dominated by the function of "scientific and technological R & D + office". Its industrial layout is positioned in biomedicine, electronic information, artificial intelligence and other popular fields in line with the current economic development trend and regional industrial layout orientation, so as to create a comprehensive high-quality benchmark park. In terms of capital strategy, we also hope to form a benign capital operation mode through a good connection with REITs issuance in the future.
Hangzhou Gemdale Viseen Science and Technology Park
Renderings of Hangzhou Gemdale Viseen Science and Technology Park
The project is located above the development of the Canal Industrial Belt and in the Smart Network Valley Town. Under the tide of digital economy, it focuses on digital industry and enables the future development of regions and cities. The project consists of 4 high-quality high-rise offices and 12 single-family garden-style villas. The concept of ecological office is introduced to create a rare private single-family yard/villa office space in the three-dimensional garden style in the Smart Network Valley, equipped with roof garden, terrace and private courtyard, so that enterprise employees can enjoy close contact with the nature when working. In addition, the project creates a raised lobby of about 8.92m and a basement of about 5.2m in some parts by adopting Class-A office standard and selecting aluminum plate + Low-E glass curtain wall facade, so as to create a high-end elite office field. A cross landscape axis and waterfront landscape belt are built in the park, equipped with about 7,500 square meters of supporting businesses to provide convenient leisure areas for business people.
Shanghai • Gemdale Viseen No. 8 Bridge (early stage of No. 8 Bridge)
Before transformation
After transformation
The project of Shanghai No. 8 Bridge is located in Xintiandi commercial area in Luwan District, Shanghai, covering an area of 19,303 square meters. It is one of the first creative industries gathering areas in Shanghai. Its original site is the original Shanghai Automobile Brake Plant, Shenbei Machinery Factory, White Elephant Battery Factory and Dyed Weaving No. 3 Factory. After 2003, with the support of Shanghai Municipal Government, Economic Commission and Luwan District People's Government, Kicers Group Limited successively implemented reconstruction, renovation, investment attraction and operation management of old plants, turning the old plants with unique historical and cultural connotation into a new carrier to attract creative talents, stimulate creative inspiration and gather creative industries. In 2015, Gemdale Properties and Investment completed the equity acquisition of the project of Shanghai No. 8 Bridge and carried out strategic joint venture cooperation with Kicers Group Limited on a series of products. "Shanghai No. 8 Bridge Project" has effectively improved the urban appearance of the region, supported the upgrading and transformation of traditional enterprises, created new tax and employment growth points for the local area, and achieved the balance between enterprise benefits and social benefits.
In 2017, "Harvest Gemdale No. 8 Bridge Asset Support Special Plan", referred to as "No. 8 Bridge ABS", obtained the no-objection letter issued by Shanghai Stock Exchange, and WINS Investment acted as the trading consultant and general coordinator. As the first "asset-light" product of asset securitization in China's cultural and creative industrial parks, it opens up a mode of financial innovation operation for the "asset light" operation of cultural and creative park projects. Shanghai No. 8 Bridge ABS won the international award of financial and real estate innovation - Gold Award for Investment and Financing Innovation with the characteristics of innovation, efficiency and high quality.
Shanghai Gemdale Viseen No. 8 Bridge (Binjiang Park) (No. 8 Bridge Phase V)
Real view of Shanghai Gemdale Viseen No. 8 Bridge (Binjiang Park)
Gemdale Viseen No. 8 Bridge (Binjiang Park) covers an area of 17,000m ², and has a total construction area of 25,000m ². The project is located at No. 603 Dapu Road, Shanghai, in the landscape and style area of Huangpu Binjiang, close to Xuhui Binjiang. In the future, it will form a new gathering area for the riverside office work of Shanghai together with Xuhui Binjiang and World Expo Binjiang. One of the major features of the project is that it is different from the standardized traditional environment such as office buildings and has more flexible display space, and is particularly recommended to display office enterprises in design related fields.
Gemdale·Oopcity (Shanghai Kangjian Plaza)
Before transformation
After transformation
WINS Investment led the acquisition of Shanghai Kangjian Plaza Project in 2019, which is a community-based business. The project is located in Xuhui District, the core of Shanghai, with a high-quality base of regional consumption and education resource and surrounding schools, so the project has great demand potential and value promotion space in education and entertainment. First of all, based on the transformation and upgrading of the property and the improvement of the use efficiency of the buildings, Kangjian Plaza has a new image in terms of hardware conditions. On the other hand, we pay attention to the improvement of service in operation management. The new Kangjian Plaza introduces catering service providers such as Fresh HEMA, Starbucks, McDonald's and Pizza Hut, as well as educational and training institutions such as Kid Castle and XRS. In the process of investment attraction, it fully considers the matching degree between the settled merchants and the surrounding needs and the quality of products and services that can be provided, so as to improve the comprehensive service of the whole commercial body, and build Kangjian Plaza into a community shopping center with children's education, leisure and entertainment as the service theme. The brand-new Kangjian Plaza, named "Gemdale Oopcity", was officially launched in December 2020, with a launching occupancy rate of 99%, a passenger flow of 100,000 on the third day after its launch and a turnover of RMB 2.7 million. The appearance of "Gemdale Oopcity" has brought great convenience and new service experience to community owners in this area.
WINS Investment is a professional institution of real estate investment under Gemdale Corporation, focusing on the management of real estate investment at home and abroad. As an important part of Gemdale Corporation's "one body and two wings" strategy, it has branches in Beijing, Shanghai, Shenzhen, Hong Kong and other cities.
The team of WINS Investment started the exploration of domestic real estate finance business as early as 2006. In 2008, it cooperated with the internationally renowned UBS Global Asset Management Group (UBS) to establish the USD fund (UG Fund) as the first standardized real estate fund in China, and it began to expand the RMB fund business in 2010. From 2012 to 2021, it was successively awarded “Top 10 China's Real Estate Fund” by many authoritative institutions and media, such as Zero21PO group, China Index Institute, CBN, China Venture, CRIC, Guandian, Chinese Venture and so on.
In recent years, WINS Investment has focused on the development of a diversified and comprehensive business system centering around residential development projects in first and second tier cities and strong third tier cities, such as equity investment, old-city renovation fund, urban renewal fund, core value-added fund, asset securitization and so on. It is committed to developing the company into the most valuable international provider of real estate financial service and creating a stable and professional investment platform for global investors.
