Middle finger Research Institute: The heat of mergers and acquisitions in the real estate industry in August has fallen back, and integrating existing properties into the portfolio has become an important way to revitalize existing assets.

The China Real Estate Research Institute released a report stating that, according to monitoring by the institute, there were a total of 9 mergers and acquisitions transactions in the real estate industry in August 2024, a decrease of 7 transactions compared to the previous month. Of these, 6 transactions disclosed transaction amounts, with a total transaction scale of approximately 7.51 billion yuan, an increase of 41.6% month-on-month. The average transaction size per transaction was 1.25 billion yuan, an increase of 112.4% month-on-month. In terms of the total number of mergers and acquisitions transactions, the heat of merger and acquisition activities in August 2024 continued to decline. The report mentioned that existing properties are gradually being included in the affordable housing system, becoming an important way for real estate companies to revitalize existing assets. In August, Zhuhai Huafa Properties announced that it will conduct transactions for existing commercial properties and accompanying parking spaces with China Resources Group, helping establish a housing system in Zhuhai that combines renting and purchasing while revitalizing its own existing assets to further promote sales; China Merchants Shekou Industrial Zone Holdings partnered with Wuhan Anjia to cooperate in the completion of the Yuyue project and the third phase of the Airport Center project, with an area to be acquired exceeding 20,000 square meters, which is expected to provide more than 500 units of affordable rental housing after renovation. 01. Real Estate Policy: Nearly 1.4 trillion yuan in financing approved for "white list" projects, supporting real estate companies in deferring related fees On the central level, on August 21, the State Council Information Office held a themed press conference on "promoting high-quality development". According to the latest statistics released by the China Banking and Insurance Regulatory Commission, commercial banks have approved 5,392 real estate "white list" projects, with approved financing amounts approaching nearly 1.4 trillion yuan. At the local level, regulatory agencies have introduced policies to further implement financing coordination mechanisms, optimize pre-sale fund management, and support real estate companies in deferring land transfer fees and related fees for urban infrastructure construction. Areas such as Huadu District in Guangzhou, Ganzhou New District in Jiangxi Province, Chengzhou City, and Shaoyang City proposed further leveraging the role of the real estate "white list" financing coordination mechanism to meet the reasonable financing needs of different types of real estate enterprises, encouraging financial institutions to provide financial support to real estate companies through methods such as extension of existing loan terms, adjusting repayment arrangements, etc., while supporting real estate companies in deferring land transfer fees and related fees for urban infrastructure construction within a reasonable period. Table: Real estate financing policies at the central and local levels in August 2024 Data source: Public information, comprehensive compilation by the China Real Estate Research Institute 02. Corporate mergers and acquisitions: CHINA RES LAND focuses on land acquisition in core cities, Vanke participates in setting up a fund to acquire two Vanke Squares, China Merchants Huafa includes existing assets in protection According to monitoring by the China Real Estate Research Institute, there were a total of 9 mergers and acquisitions transactions in the real estate industry in August 2024, a decrease of 7 transactions compared to the previous month. Of these, 6 transactions disclosed transaction amounts, with a total transaction scale of approximately 7.51 billion yuan, an increase of 41.6% month-on-month. The average transaction size per transaction was 1.25 billion yuan, an increase of 112.4% month-on-month. In terms of the total number of mergers and acquisitions transactions, the heat of merger and acquisition activities in August 2024 continued to decline. Chart: Number of real estate industry mergers and acquisitions transactions and transaction scale from January 2023 to August 2024 Data source: Public information, comprehensive compilation by the China Real Estate Research Institute In terms of the types of business targets in the transactions, the mergers and acquisitions transactions in the real estate industry in August 2024 included real estate development, commercial and property projects, among others. In terms of residential development, leading real estate companies acquire quality projects and expand their brand influence by acquiring equity in project companies. China Merchants Shekou Industrial Zone Holdings, in partnership with Shanghai Xuhui Development Group and Nanchang City Municipal Public Utilities Group, acquired 100% equity of Shanghai Xinchangqiao Enterprise Development Co., Ltd., taking over the Xuhui District Xinchangqiao urban renewal project. By obtaining quality projects in Shanghai's core area, China Merchants Shekou Industrial Zone Holdings will enhance its market position in Shanghai and also provide certainty for maintaining its own performance. Leading real estate companies are speeding up asset disposal, focusing more on residential business layout. From January to August 2024, CHINA RES LAND listed and disposed of assets, while also acquiring multiple high-quality land parcels, with a total land acquisition amount of 15.9 billion yuan, ranking among the top in the industry. The land acquisition amount in core first and second-tier cities such as Beijing, Guangzhou, Hangzhou, Chengdu, and Wuhan accounted for nearly 80%. At the mid-year performance meeting held at the end of August 2024, the management of CHINA RES LAND stated that in terms of total sales in 2024, CHINA RES LAND aims to strive for the top four in the industry. These high-quality land parcels are expected to provide a solid foundation for CHINA RES LAND's performance, continuously consolidating and enhancing its industry position. Table: Statistics on types of mergers and acquisitions transactions in the real estate industry in August 2024 Data source: Public information, comprehensive compilation by the China Real Estate Research Institute In terms of commercial projects, Vanke partnered with CITIC SEC and Taikang Life to establish the CITIC Vanke Consumer Infrastructure Fund, with a scale of 2.234 billion yuan, mainly used to acquire assets and liabilities of Beijing Jiugong Vanke Square and Shenzhen Longgang Vanke Square. This move is part of Vanke's focus on its core business and implementing its "comprehensive plan". At the mid-year performance meeting held at the end of August 2024, the management of Vanke stated that in the first half of 2024, it continued to advance large-scale transactions and asset revitalization efforts. Over a hundred billion yuan has already been collected, and the work on large-scale transactions in the second half of the year will follow the established route, with over ten projects currently in negotiation. At the same time, distressed real estate companies are selling projects to resolve debt issues and obtain working capital. SHIMAO GROUP sold a residential, commercial, and commercial complex in the Jimei District of Xiamen to China Construction Third Bureau. The residential portion of the project has been completed and delivered. The commercial part has also been completed and is in operation, and the office building part (including two commercial properties) is under development. Due to liquidity crisis preventing further investment and support for the project, SHIMAO GROUP sold the project to China Construction Third Bureau to repay its debts. Regarding property management, real estate companies are acquiring property management companies to accelerate the revitalization of assets.Transition to light asset business. In August, Hua Yuan Property acquired 100% equity of Beijing Huayuan Haotiandi Intelligent Property Services Co., Ltd. owned by Huayuan Group. At the end of April, Hua Yuan Property had announced its intention to transfer related assets and liabilities of its real estate development business to its controlling shareholder, Huayuan Group, after the completion of the transaction, Hua Yuan Property will focus on construction, hotel operations, asset management and operation, property management, and urban operation services. This acquisition will drive Hua Yuan Property's transformation into a comprehensive urban operation service provider. Existing properties included in the affordable housing system, gradually becoming an important way for real estate companies to revitalize existing assets. In August, Zhuhai Huafa Properties announced that it will conduct transactions of existing commercial housing and supporting parking spaces with Huafa Group, helping to establish a system of renting and purchasing housing in Zhuhai while revitalizing its own existing assets and further promoting sales; China Merchants Shekou Industrial Zone Holdings cooperated with Wuhan Anjia to complete the signing of the Yuanyue project and the third phase of the Konggang Center project, with an area of over 20,000 square meters to be acquired, and is expected to provide more than 500 sets of affordable rental housing after renovation and decoration. M&A Finance: Jinka receives 12 intention of restructuring registration materials, Cinda Real Estate and Minsheng Trust take over the Baoneng City project in Hefei At the group level, Jinka issued an announcement on the progress of the public recruitment and selection of restructuring investors. As of August 16, Jinka has received formal registration materials submitted by a total of 12 intention of restructuring investors, involving a total of 17 enterprises. The intention of restructuring investors include a consortium of Zhongjin Capital (3 companies), Great Wall Guofu Real Estate, Sichuan Capital Market Relief Development Securities Investment Fund Partnership Enterprise (Limited Partnership), China Merchants Ping An Asset Management, China Foreign Economic and Trade Trust, Shanghai Houjia Health Technology Consortium (3 companies), Yiwu Tianxiang Travel and Cultural Technology, Chongqing Kirui Jia Information Technology, Guangzhou Borun Enterprise Management, Chengdu Fengzhi Technology Consortium (2 companies), Jinxiu Zhonghe (Tianjin) Investment, Chongqing Meilian International Warehousing and Transportation (Group), etc. At the project level, Cinda Real Estate and Minsheng Trust took over the Baoneng City project in Hefei. On August 5, the administrator of Hefei Baohui Real Estate Co., Ltd. announced the results of the restructuring investor recruitment. Cinda Real Estate and Minsheng Trust became the restructuring investors of Hefei Baoneng City, with restructuring assets including the fourth phase of residential buildings, commercial plots C and D. It is understood that in 2014, Baoneng Group had won two plots in Binhai, Hefei for the Baoneng City project with bids of 1.14 billion yuan and 2.4 billion yuan respectively, including residential, commercial office, and hotel formats. In 2018, after the completion of the first three phases of residential buildings, the remaining fourth phase of residential buildings and commercial office projects were in a stagnant state. In May 2021, the main structure of the Baoneng City T7&MALL project was completed, but completion was delayed due to contract disputes with the construction contractor. In taking over Hefei Baoneng City, Cinda Real Estate may participate in project development and management as the operator. Table: Real estate mergers and relief by financial institutions from January to August 2024 Data source: Public information, compiled by the China Real Estate Research Institute Appendix: Real estate industry merger and acquisition situation in August 2024 Data source: Public information, compiled by the China Real Estate Research Institute