Greenland injects S$5b assets into S'pore SPV

Singapore

CHINA'S biggest state-owned developer Greenland Group has taken the first step of securitising its global real estate assets and has made Singapore its first port of call.

For a start, it is injecting 20 hotels in China worth close to S$5 billion into Amare Investment Management Group - a special purpose vehicle set up by Singapore-based Glory Fund Management Group - with the hope of listing a Reit in the future.

But its game plan is much bigger in scale. "This is only a start," said Greenland chairman Zhang Yuliang at a briefing on Friday. "The second step for us will be to securitise global assets and our non-hotel assets in China by tapping Singapore's capital market."

Under an agreement inked between Greenland and Amare, the latter will acquire Greenland's existing hotel assets both in China and overseas. Amare will also set up a joint venture with Greenland to manage these hotels, which already have management contracts with international hotel operators including InterContinental Hotels Group, Starwood, JW Marriott, and the Melia Group.

The first batch of hotel assets in China being securitised are located in cities like Shanghai, Nanjing, Jinan, Xi'an, Zhengzhou and Yangzhou.

BT understands that Amare counts institutional investors like the banks, pension funds and sovereign wealth funds among its investors. Mr Zhang also met up with representatives from the Singapore Exchange (SGX) and the Monetary Authority of Singapore while in town.

He shared with reporters that he hopes to eventually spin the private vehicle into a Reit, subject to market conditions and regulatory approval. "We will work hard to meet the requirements of SGX to proceed with the capital market exercise later on."

David Su, chairman of Glory Fund and a partner of Los Angeles-based Global Capital Markets, said Singapore's efficient tax and legal regime, which has attracted a much bigger pool of Reits and business trusts compared to Hong Kong, is a major reason why he has chosen to woo Greenland to Singapore.

At the same time, he sees Amare's collaboration with Greenland as a potential catalyst for other large Chinese companies to tap Singapore's capital market. The private equity veteran of more than 30 years noted that one bugbear of the Singapore market has been that its liquidity is not as deep as Hong Kong's, which is buoyed by the listing of red chips from mainland China.

"We think that the collaboration between Amare and Greenland can catalyse the growth of Singapore's capital market, attract quality companies to Singapore, not the small-and-medium enterprises, to improve Singapore's market capitalisation and liquidity," he said.

Deloitte chief-of-operations Ernest Kan, one of the professional advisers for the Greenland deal, shared the same sentiment, citing a dismal 2015 when 13 companies were listed on SGX, of which only one is a mainboard listing, and a recent dearth of new Reit listings. "We all hope that large companies will come to list here," he said.

Listed in both Shanghai and Hong Kong, Greenland has made many eye-catching overseas investments in recent years, including a US$1 billion mixed-use Metropolis project in Los Angeles and a historical site in Canary Wharf in London for £600 million (S$1.18 billion). To-date, it has invested more than 120 billion yuan (S$25.6 billion) overseas. It is also one of the biggest Chinese spenders in Iskandar Malaysia, with two mega projects in Danga Bay and Tebrau Bay.

In its global expansion, Greenland will continue to focus on developed countries such as New York, Los Angeles and Sydney; markets with strong links with China such as Malaysia and Singapore; as well as those with a major tourist draw, Mr Zhang said.

Greenland is still looking for opportunities to invest in Singapore, be it in greenfield projects or existing buildings, he added. It had in August 2014 came in seventh in its joint bid with a unit of Amara Holdings for a commercial and residential plot in Potong Pasir and has stopped bidding here since.

"Recently, we are focusing on some plots of land to build tourist facilities, industrial facilities and offices, but we are still searching, and we are hoping that some Singapore companies with resources in these areas will partner us," he said.