The largest shareholder of Vanke offers to buy SCPG REIT, with an expected investment of 1 billion yuan.
Vanke has announced that Shenzhen Metro Group Co., Ltd., its primary shareholder, is set to subscribe to CICC SCPG Consumer REIT through strategic placements, with a subscription not exceeding 30% of the total fund-raising amount. The estimated valuation of SCPG REIT stands at 3.959 billion yuan, and Shenzhen Metro's investment is anticipated to hover around 1 billion yuan. Should the final investment amount reach this figure, it would mark the most substantial investment by a state-owned enterprise into consumer REITs to date. Vanke expressed its outlook, stating, "The successful issuance of CICC SCPG Consumer REIT is expected to revitalize assets within our affiliated company, SCPG Group, further bolstering our asset management capabilities." Through this REIT issuance, Vanke aims to establish a comprehensive business model, thereby expediting its development.
Sources report that CICC SCPG Consumer REIT is among the first batch of approved consumer infrastructure REITs, with its underlying asset being the TOD shopping center Hangzhou West Lake Impression City. As of June 2023, the occupancy rate of this property stood at an impressive 99.2%, with a valuation of 3.959 billion yuan. Towards the end of 2023, Vanke's bond prices experienced a significant drop due to certain real estate companies defaulting on their debts. To counter this, Vanke is exploring avenues such as syndicated loans and operating property loans. Analysts suggest that by issuing REITs and pursuing operating property loans, Vanke can mitigate cash flow constraints, optimize its debt structure, and reduce the risk of public debt defaults. Assessing this year's sales performance, Vanke achieved a cumulative contract sales area of 2.255 million square meters and a contract sales amount of 33.47 billion yuan from January to February.
Moreover, Shenzhen Metro Group's investment in CICC SCPG Consumer REIT is seen by some industry insiders as a significant indication of Shenzhen's state-owned assets lending support to Vanke. Since Shenzhen Metro's investment in Vanke in 2017, both entities have engaged in extensive cooperation across various sectors. Notable collaborations include the establishment of a joint venture company in June 2020 and strategic partnerships with six Shenzhen municipal-owned enterprises, focusing on urban renewal, logistics services, and urban-rural integration, signed in November 2022. At a forum in November 2023, Shenzhen state-owned assets reaffirmed their commitment to assisting Vanke through market-oriented and legal means, if necessary. Shenzhen Metro Group's substantial investment in SCPG Consumer REIT may signal further supportive measures in the future.