Another round of policy regulation has brought domestic real estate companies into a credit crunch, but this has also spawned various models of real estate funds.
In addition to real estate companies launching real estate funds, external funds from VC / PE institutions are extending an olive branch to real estate companies. It is reported that Shenzhen Innovation Investment Group is currently actively preparing for the first phase of real estate investment funds. Shenzhen Venture Capital sources revealed that the real estate fund raised by Shenzhen Venture Capital will give priority to cooperation with large real estate companies, and the scale of the first phase will be more than 500 million yuan.
It is understood that the scale of real estate funds established by domestic investment currently does not exceed 10 billion yuan, and it is still in the initial stage of development and is exploring a business model suitable for the national conditions. Affected by regulation, the situation of real estate companies gradually becoming "bad money" is instead a development opportunity for real estate funds.
Fangxing Real Estate Fund
10 billion yuan, which is the scale of the RMB real estate investment fund initiated by Gemdale Group and investment partners in the next three years. On April 9th, Gemdale Corporation announced that the first fundraising of the first phase of the real estate fund initiated in cooperation with UBS was officially completed. The fundraising was US $ 100 million. The five investors were from Europe, the Middle East and Asia. This is the first foreign real estate investment fund successfully launched and raised by a developer in mainland China.
Gemdale Group Chairman Ling Ke said at the 2009 performance briefing that these real estate funds will mainly invest in the residential real estate industry in the future, and will also invest in commercial real estate and mergers and acquisitions, and revealed that the scale of RMB fund management in three years is expected to reach 80 100 million to 10 billion yuan. In March, a prosperous China real estate investment fund led by a real estate developer was also announced, and the scale of the first phase of financing reached 500 million yuan. The fund was entrusted by Zhang Yingeng, chairman of Beijing Yinxin Investment Co., Ltd., Yi Xiaodi, president of Sunshine 100 Real Estate Group, Fan Wei, chairman of Forte Group, Zeng Jun, chairman of Fuhui Investment Management Company, and Xishen Assets Zeng Yong, CEO of Management Co., Ltd., initiated it together.
Mainly focused on cooperation at the project level. In terms of exit, there can be premium repurchase, dividend exit and secondary market exit. Yang Guangzhi, assistant to the chairman of Shengshi Shenzhou, said that for the scale of future fund plans, he said that the company plans to raise more than 5 billion yuan in the next three years. This is only the real estate fund that has announced the fundraising information. It is reported that Shenzhen is currently innovating Investment Group Co., Ltd. is also actively preparing for the first phase of real estate investment funds. "We are currently negotiating with our partners, and it is not yet time for the announcement. "Shenzhen Venture Capital President Li Wanshou said. All along, the domestic real estate development model has followed Hong Kong's" full model "development, namely land acquisition, development, sales, and land acquisition, which requires a lot of financial support. The double suppression of regulation and the financial crisis made the weak link of this model obvious: If the market changes, existing sales projects will have a problem of repayment, and newly launched projects will face financial pressure. At that time, because of the land transfer fee Deposits were forfeited in a timely manner. This caused real estate companies that felt “not bad†because of strong sales before 2007 to discuss stable financing methods.
On the other hand, the “jedi counterattack†in the real estate industry in 2009 made the equity investment field and private hot money both optimistic about the current low-urbanization Chinese real estate industry. "In this way, companies have been strengthened by policies to increase financing needs from channels other than banks, and equity investment has also begun to be willing to enter this field." Shenzhen Venture Capital said.
In fact, real estate funds have always been an important source of funds for development projects by foreign real estate developers. "In the United States, the" real estate developer% 2B fund "model is adopted, that is, the division of development and investment division." Du Lihong, a partner of Beta Strategy Studio who has long studied financial real estate. It is understood that the current real estate funds are mainly divided into real estate investment funds and real estate development funds. The former can participate in the development of real estate projects at the same time, but more is to invest in existing real estate properties and realize value-added in holding; the latter is mainly focused on the development of real estate projects.
In fact, in 2008, when domestic funds waited and waited long and did not provide support to the real estate industry, long-established foreign-funded real estate funds entered the market. In June of that year, Evergrande Real Estate successfully obtained investments from several private equity funds totaling US $ 600 million from Zheng Yutong, Merrill Lynch, and Deutsche Bank. In addition, Evergrande received a US $ 130 million investment from Merrill Lynch in 2006 and an additional US $ 130 million in cooperative projects in September 2007. Evergrande received a total of US $ 860 million in financial support from private equity investment. However, the financial crisis has brought about the negative impact of foreign real estate funds, which has been hampered by the local real estate market in the US and Europe, and some funds have been withdrawn passively on a large scale.
At present, it is clear that domestic PE institutions have realized that real estate funds are previously unexplored areas, and domestic-funded real estate funds have also ushered in development opportunities. "Now land resources are becoming scarcer and developers' investment costs are increasing. The cost of land acquisition generally exceeds 30%, and even close to 50% in first-tier cities. The credit plate can no longer meet the rapid growth of real estate investment. In this context Under the expansion demand of real estate developers, real estate funds have great opportunities. "Li Xiaodong, president of Lianhua International Trust and Investment Co., Ltd. said. "The currently established real estate fund is also exploring its own business model." Du Lihong said.
It is understood that the mature management model of foreign real estate funds is that managers have the absolute right to choose projects and strictly control risks. However, at home, most funds still use the form of self-initiated funds by real estate companies. For example, the trust fund initiated by Evergrande was aimed at the fund-raising of its single project; the fund launched by Gemdale Group this time will mainly be invested in Gemdale development projects in the future; Gemdale will screen out the projects that need to be invested, and then Its partners decide whether to invest. That is to say, Gemdale Group plays the role of initial deletion in project decision-making.
"This is also a fusion of domestic real estate funds to the local culture. PE and real estate companies work together to initiate funds, fund managers are responsible for fundraising, and project selection is jointly selected by real estate companies and fund managers." Du Lihong said. The capital investment of Shengshi Shenzhou is more in line with the operation of international real estate funds. "In the early stage of fund operation, the company mainly invests in real estate companies with which the company is familiar. After the fund operation is mature, it will consider investing in small and medium-sized real estate companies with more financing needs." Yang Guangzhi said that the fund will not give priority to the fund's sponsor, Forte Group. Real estate projects. "We are targeting the entire market."
On the other hand, the issue of investor stability is being tested in the more cyclical industry of real estate. It is understood that the main investors of foreign real estate funds are mature investors such as social security funds and university education funds. Their investment ideas are mature and stable, and they will not withdraw easily unless there are external objective factors of the 2008 financial crisis. At present, domestic investors are mainly wealthy individual investors. "Everything is easy to say when the real estate is booming, it is easy to raise funds, and it is also easy to invest in projects. If the real estate falls into a trough, it is very prone to problems in fundraising." Du Lihong said that it is often easier to find the right quilt during the period of the real estate trough. Underestimated investment projects increase investment returns.
The above-mentioned deep venture capitalists said that at present, if there is a real estate fund management company with industry prestige in China, which can obtain stable returns regardless of whether the real estate is in a cyclical trough or peak, can it attract more investors. "It takes a very long time to verify, because the real estate industry may have a short period of 5 years and a long period of decades."
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