As a domestic leading company of real estate private equity management, Wins Investment has accumulatively exerted management over 1 USD fund and more than 20 RMB funds since it launched the first standardized real estate USD fund in China with UBS in 2008. By the end of 2016, the accumulative investment and management scale of the company had reached about RMB 30.1 billion (equivalent).

When Wins Investment was established in 2006, the only thing it might want to do was to make some exploration in the sector of real estate finance, and seek for investment opportunities for some projects inside Gemdale Corporation. So far, the company has become a financial service provider offering real estate fund service to all developers and institutional investors. Based on hard work of ten years, Wins Investment has accumulated a lot of strength and stamina of its own.

Recently, on a scorching afternoon, house.ifeng.com (a real estate website) made an extensive interview with Xu Yafeng, president of Wins Investment Management Co., Ltd. headquartered in Beijing. Xu made an in-depth discussion to such issues as the asset securitization of real estate, the role of REITS in real estate investment and the return on investment in projects. 

Xu Yafeng, president of Wins Investment

Real estate finance is an important part of strategy

The commercial connotation reflected by numbers was more obviously expressed during the talk between house.ifeng.com and Xu Yafeng, president of Wins Investment, “Real estate finance is in itself an important part of the “1+2” strategy of Gemdale Corporation. With the help of the platform advantage of Gemdale Corporation, through the mature accumulation of Wins in investment, financing, management and withdrawal, we endeavor to create more value for investors.”

As informed, Wins Investment now has its branches in Beijing, Shanghai, Shenzhen and Wuhan, and has more than 50 senior professionals. With the help of the platform advantage of Gemdale Corporation, and the mature accumulation of Wins in fundraising, investment, management and withdrawal, Wins Investment is now trying to create more value for investors, and set up a capital platform for multilevel cooperation between small and medium-scale developers and Tier-1 brand developers.

Developers should first maintain their independence before undertaking fund business 

In recent years, the resources of real estate enterprises show a more and more obvious trend of focus on Tier 1 and Tier 2 cities. Quite a few powerful real estate enterprises are now accelerating their scale layout and continuously expanding their land reserve. Amidst fierce market competition, “small and medium-scale developers face a more and more difficult situation. On the other hand, the contraction of liquidity makes it more and more difficult for them to obtain funds,” said Xu Yafeng. Based on such a market pattern, Wins Investment is also developing its agency construction + investment business.

As pointed out by Xu Yafeng, both internationally and domestically, developers should first ensure their fund independency before undertaking any fund business, which is a basis for guaranteeing the full market operation of funds and maintaining the maximum interest of investors.“In the projects based on our cooperation with the corporation, we and all other funds are in a state of completely fair competition in the process of investment cooperation with the corporation. For example, a special department would be responsible for searching for funds outside in the early period of corporation project preparation. We and other funds are under the same negotiation conditions, and also compete for the bid fairly as a party of negotiation. 

In terms of mechanism, the cooperation between UBS and us can be taken for an example. The equity ratio between UBS and us is 50% : 50%, and  unanimous votes at the investment committee meeting are required. As long as one vote of UBS is cast against the investment, the investment cannot be put into effect. Therefore, we screen projects that meet investor requirements from the perspective of funds. In addition, in terms of the operation indicators issued by the board of directors to us, none of these indicators demands us to finance the corporation project. Moreover, we also very actively expand various real estate projects suitable for investment on the market.”  

 A financial provider that connects the real estate industry and the finance industry

When asked about whether the barrier for the undertaking of real estate funds with a background of developer lies in “license”, Xu Yafeng held the opinion that, on the present domestic finance market, licensed financial institutions indeed boast a lot of inborn advantages. However, funds originating from overseas mature markets are a principal-agent relation in essence. That is to say, investors entrust funds to fund managers out of trust in the professional competence of fund managers, thus achieving the value preservation and increase of funds. Wins is a fund company originating from a real estate developer, with its professional competence in real estate having been extensively recognized on the market. In fact, this is exactly the lifeblood for the survival and development of real estate funds.

“In my opinion, Wins Investment is a provider of real estate finance between the real estate industry and the finance industry. I hope that this industry can develop healthily. Moreover, we will offer more consummate, efficient and excellent service to this industry,” said Xu Yafeng.

The core of real estate funds lies in investment capacity and asset management

When asked how to treat the advantage of integration between developers and funds when more and more developers have established their real estate funds, Xu Yafeng answered, the core of real estate fund management lies in investment capacity and asset management capacity. National operation modes make real estate enterprises have a mature system in the selection, operation and management of investment projects. By relying on the shareholder operation platform, the funds sponsored by real estate enterprises are more efficient than other funds in such aspects as investment, asset management, risk control and earnings. 

When house.ifeng.com asked the question of “Is the fund of real estate a life-saving straw or a new development mode for real estate enterprises”, President Xu answered, in the long run, some development enterprises might choose to gradually exert their own investment and management advantage and embark on the fund mode. Some overseas developers have successfully completed their transformation. Those familiar to Chinese market, e.g. Singapore Capitaland, USA Tishman and Hines are exactly representatives of this type.

The basic characteristic of this mode is that the developers set up a fund with their own share capital and that of investors, and the developers transform themselves into fund managers serving investors from fund management, development to asset management. Under this mode, fund managers would not care which projects are their own and which are others’, because they have already evolved into managers who place their own funds with those of others together for management. Of course, this poses a higher requirement for the financing capacity, investment capacity and the asset management and operation capacity of managers. Therefore, only the companies with standardized management, excellent performance and popularity among investors can develop well. 

President Xu said, in 2017, Wins Investment will give full play to its role as an “aircraft carrier” in linking the platform of Gemdale Corporation and the capital of institutional investors and small and medium-scale developers; Wins investment will closely cooperate with institutional investors in such fields as financial innovation, asset acquisition and fundraising; Wins Investment will try to develop jointly with small and medium-scale developers, promote the efficiency of fund allocation and achieve advantage complementation and cooperation win-win.

About the rate of return

Although not directly answering the question of “rate of return”, Xu Yafeng expressed full confidence in the equity fund earnings of Wins Investment, saying that Wins Investment is now starting the raising of a new equity fund. 

At the mention of the future business orientation of Wins, Xu Yafeng held the opinion that, the company will expand its research, development and investment in innovation (e.g. urban renewal and asset securitization) while steadily boosting its investment in residences. In some innovation fields, Wins has already made notable progress, and will soon appear on the capital market. 

As informed, in May of this year, Wins Investment smoothly acquired the unanimity letter issued by Shanghai Stock Market for “Harvest Gemdale No. 8 Bridge Assets Backed Security” in cooperation with Harvest Capital, which is the first asset securitization product of cultural creative park in the domestic history of ABS. Wins Investment and Harvest Capital serve as the transaction consultant and planning manager of this project, which is now in the phase of issuance. As reported, during project renovation and operation, several Party and state leaders visited the No.8 Bridge Project. The General Office of State Council, the People’s Government of Shanghai and the People’s Government of Luwan District offered policy support to the conversion of industrial factory buildings into a cultural creative park to different degrees respectively.

Brief introduction to Wins Investment

Wins Investment is a wholly-funded subsidiary of a listed real estate enterprise Gemdale Corporation （600383.SH）, an important part of the “1+2” strategy of Gemdale Corporation, and a company of private equity management concentrated on the investment of real estate market.

With the spirit of a pioneer, Wins has become a leading enterprise in Chinese real estate funds with the help of Gemdale’s 29-year experience in real estate development since it started its exploration in the field of real estate finance in 2006.

This document is extracted from the journal of house.ifeng.com. Please indicate the origin before reprinting.