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Joy City Establishes PE Fund for High Potential Acquisitions
HONG KONG, Aug 18, 2017 - (ACN Newswire) - The Board of Joy City Property Limited ("Joy City" or the "Company", SEHK stock code: 00207) is pleased to announce that the Company has established an offshore fund and an onshore fund (collectively, the "PE Fund") with a number of well-known institutional investors, with the aggregate investment of RMB11,400 million (equivalent to approximately HK$13,110 million).
Pursuant to the Framework Agreement, the aggregate investment will be RMB6,270 million (equivalent to approximately HK$7,202 million) in relation to the offshore fund, of which the aggregate commitment of the Company will be RMB2,280 million (equivalent to approximately HK$2,619 million), representing 36.36% of the interest in the offshore fund; and RMB5,130 million (equivalent to approximately HK$5,908 million) in relation to the onshore fund, of which the aggregate commitment of the Group will be RMB1,140 million (equivalent to approximately HK$1,313 million), representing 22.22% of the interest in the onshore fund. Accordingly, the total commitment by the Group in relation to the formation of the PE Fund will be approximately RMB3,420 million (equivalent to approximately HK$3,932 million). The PE Fund is established to search for opportunities to acquire potential property projects in the PRC for upgrading and redeveloping commercial projects or mixed-used projects with the flagship 'Joy City' brand owned by the Group, in order to accelerate the strategic expansion of Joy City.
The Board believes that the introduction of investors through the establishment of the PE Fund is consistent with the strategic development of the Group. Relying on the rich experience of the investors in property investment, the Fund will further improve the quality of the 'Joy City' brand and enhance the effectiveness of the Group's resources through the advanced management experience and integrated strategic resources, so as to establish an influential brand in China's property industry in the long term. In addition, the establishment of the PE Fund will enable the Group to implement its "asset management" and maximize its resource efficiency through the cooperation with well-known investors.
In September 2016, Joy City established the Joy City Core Fund Platform to introduce the fund models widely used by commercial property investment and development into China, and transform itself from the traditional development and operation pattern to fund cooperation and management. Looking forward, the Company plans to use more fund models to accelerate business development. The establishment of the PE Fund will provide adequate capital for Joy City to acquire existing commercial projects in the market, achieve brand management output and accelerate strategic expansion.
Joy City's Strategic Expansion Model
Joy City always adheres to strategy-guided expansion. Since Joy City issued the "big asset management" strategy in 2016, the Company has been transformed from a traditional real estate developer to an asset operation and management provider. The Company mainly relies on three models to expand, namely the cooperative development model, fund management model and management output model. The cooperative development model mainly targets new projects with higher future profits and appreciation potential, especially mixed-used projects. It introduces partners for joint development, and the project sites are mainly located in the core areas of tier-1 and tier-2 cities. The fund management model mainly targets existing projects in the market. It helps achieve low-cost expansion by acquiring existing shopping malls. The PE Fund will mainly serve this model. Lastly, the management output model targets projects under construction or implementation. By the direct output of brand operation and management, no or lower costs and expenses are borne by the Company.
A number of new projects strategically developed by Joy City since 2016 such as Tianjin Heping Joy City are asset-light projects with direct brand management output, and Shanghai Changfeng Joy City is a M&A project.
Commercial Properties Entering the Inventory & Operation Era
In recent years, the rapid development of the Internet has had a great impact on the retail market and posed more operating pressure to shopping malls. In the future competition environment, traditional business will enter the phase of quality improvement and slowing development. Space transformation will bring about industrial innovation. The advantages of shopping malls with fine operation will become more obvious. High-quality operating capacity will become the core competitiveness of enterprises.
Joy City has always adhered to the development idea of "strengthen operation, focus on service, and keep innovating". The Company has paid attention to managing the client base, developing membership economy and discovering customer needs, in order to strengthen the differentiation of Joy City shopping malls. For instance, the Company keeps exploring the richness of Joy City's commercial "space" and increasing the proportion of entertainment experience in commercial activities. The "neighborhood" concept initiated by Joy City has been continuously developed and innovated in the Joy City family. For example, the QiE Commune, Garage No.5 and Super Factory of Tianjin Joy City, Yuejie and Shijian of Chaoyang Joy City and Mofang 166 of Shanghai Joy City have served as industrial trend setters.
In addition, the real estate teams of Joy City have rich experience in the acquisition and transformation of commercial projects. In the face of business problems including rapid industrial development, intense market competition and homogenization, the Company will strengthen the product strength of Joy City and maintain the leading position in the industry by virtue of its favorable brand image and professional operation and management capabilities, in the form of high potential project acquisition, business transformation and customer value discovery.
About Joy City Property Limited
Joy City Property Limited (HK00207) is the leading commercial property developer and operator of COFCO Group, focusing on the development, operation, sales, leasing and management of complexes and commercial properties in the PRC.
The group mainly engages in the development, operation and management of mixed-use complexes under the brand of Joy City, and owns projects include 14 Joy City complexes in Beijing, Shanghai and other 14 tier 1 and tier 2 cities. The group also has prime investment properties strategically located in first-tier cities, including Beijing COFCO Plaza and Hong Kong COFCO Tower, as well as high quality properties held by the Group, namely Shanghai Joy City Joy mansion one. The Group operates a number of national high-end luxury hotels, including W Beijing-Chang'an, The St. Regis Sanya Yalong Bay Resort and MGM Grand Sanya. These high quality property projects are strategically located in central districts of first or key second tier cities with good investment and appreciation potentials.
Looking forward, the Group will maintain the two-wheel-drive business strategy of "holding and selling properties", the development strategy of "light and heavy asset", and establish the development model of "Joy City Asset Management" combined real estate with finance, enhancing product quality and cost-effectiveness, so as to create value for its customers, shareholders and partners. The group will inherit the ideals of "Sustain Operating for Centuries", and preserve with the "young, fashionable, trendy and quality" brand spirit of Joy City to lead the trend of new city lifestyle of China. It is a mission of the Group to assist in coordination among and development of cities in China and become a leading complex and commercial property developer in the PRC.
Sectors: Daily Finance, Daily News
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