Steadiness, innovation, and professional operating ability are the three main factors that help WINS Investment develop sustainably, healthily and stably.

Reporter丨From Yang Bin 丨China Real Estate Finance

The year 2008 was an exceptionally turbulent year for the entire real estate industry and the financial sector. Under the influence of the global financial crisis, many small and medium-sized enterprises went out of business or were acquired. However, when the benefits brought by the Olympic Games began to show, the Chinese real estate market started a new wave of upturn, and financial institutions also started the road to recovery. WINS Investment emerged exactly in that subversive tide of the times. In 2008, the WINS Investment team partnered with UBS Global Asset Management (UBS) to establish a US dollar fund, the first standardized real estate fund in China, and began to expand its RMB fund business in 2010. Based on the ups and downs of the times, when the industry is facing consolidation and transformation today, WINS Investment's expansion path shows a different landscape.

The capital management of real estate should conform to market changes

“In the past two decades, China's real estate industry was in a state of rapid growth. In contrast, the present real estate industry will tend to be more rational and steady under the new normal of regulation and control. Large real estate enterprises have relatively obvious advantages in brand ability, financing ability and management ability, so the market resources and industry concentration will show further bias to large-scale real estate enterprises.” In a recent interview with China Real Estate Finance, Xu Yafeng, president of WINS Investment, said that as a member of the real estate developer Gemdale Corporation, WINS Investment will still focus on the field of real estate development, integrating the industry and linking the capital.

Unlike the past, the market demand in China is gradually changing from the space of living to the space of office, living, consumption and entertainment.

Xu Yafeng believes that as real estate capital management enters the era of stock, we should respond to the changes in the market and choose high-quality target assets that can adapt to the needs of the times.

For example, the choice of office space in recent years can be referred to as “orientation to multi-function space” or “orientation to industrial park”. Especially this year, due to the impact of the epidemic, with regard to the demand for office space, air quality, environmental quality and other factors, there is an increasing demand for office space oriented to industrial park.

Therefore, industrial parks of this category are what WINS Investment has continued to focus on recently. In actual investment cases, WINS Investment has been involved in the project of Shanghai No. 8 Bridge Industrial Park and the project of Hangzhou 58 Industrial Park, which are low-density open office spaces. Through the operation and management, the surrounding supporting services are enhanced to form a multi-dimensional office complex integrating new office, business and leisure, which very well meets the users' demand for new office space.

In addition, community commerce with demand potential and room for value enhancement is also a key sector for WINS to focus on, and WINS Investment will create greater value through capital operations and asset management in the future. For example, the project of Shanghai Kangjian Plaza is a typical example of a project of community commerce among urban renewal projects.

From the perspective of private equity funds of real estate, the comprehensive capability of a real estate fund company is usually measured by “fundraising, investment, management and exit”. However, in Xu Yafeng's opinion, “fundraising, investment, management and exit” is a systematic and complementary capability, with differentiated requirements and focuses in terms of technology and capability.

The link of “investment” is to evaluate and balance the risk and return of the project from the perspective of the buyer's market, and to select the project that corresponds to the investment strategy. The link of “exit” is to have a full understanding and knowledge of the counterparty from the perspective of the seller's market, to control the transaction risk and to successfully complete the exit within the set schedule. All links of “fundraising, investment, management and exit” require the professional ability and long-term attention of the core professional team.

According to Xu Yafeng, from positioning, investment, operation, renovation, to marketing and exit at a later stage, all links are finely coordinated and managed in order to maximize the value of asset management. Through precise investment, careful positioning and fine operation, we should focus on tapping the asset efficiency and creating fund value.

In this regard, he also pointed out that in the current market environment, when facing various real estate industries and various links of “fund raising, investment, management and exit”, we should cooperate with professional teams in each segment to form complementary and synergistic development of their respective advantages and resources.

In terms of capital market strategy, Xu Yafeng said that the ideal state in the future is to create a “PE + REITs” two-wheel drive model. In the pre-development stage of the project, private equity funds can be used to invest a certain scale of equity capital in the project in a legal and compliant manner, and then go on to acquire, renovate, add value to and operate the project.

Second, in the mature operation stage of the project, after the formation of relatively stable cash flow, the assets can be securitized in the capital market to achieve exit, and a public offering market can be opened up under the circumstances permitted by the policy, so that it can become a stable income product that the public can buy.

“We should really connect the 4 links of ‘fundraising, investment, management and exit’, introduce different investors in different stages, and choose public offering in the stable stage, which is the main strategic direction that WINS Investment research has been exploring.” Xu Yafeng said.

Three elements of corporate development

As a wholly-owned subsidiary of Gemdale Corporation, the team of WINS Investment started its exploration in the field of real estate finance in 2006 and has so far grown into an alternative investment management institution focusing on domestic and international real estate.

By relying on the advantageous resources of Gemdale Corporation, together with more than ten years of experience in market judgment and project control, WINS Investment can give full play to its resource integration ability, financing ability, brand premium ability and active management ability. The fields that we are proficient in include equity investment oriented to development and the “investment + construction” model in collaboration with Gemdale Corporation. At the same time, WINS Investment is also exploring new fields, including urban renewal funds, core value-added funds, old-city renovation funds, and other comprehensive business systems.

What are the professional capabilities that WINS Investment has relied on to stand out in the industry so far? Xu Yafeng summarized them as: steadiness, innovation and professional operation, and pointed out that these elements had helped WINS Investment to develop sustainably and healthily.

Steadiness First is always the company's investment philosophy. Xu Yafeng believes that investments should not be too adventurous. The first and foremost thing is to exert good management over the investment, because it is almost the largest capital expenditure item. We should look at this market calmly and objectively, control the pace of our investment, and we should also properly operate and manage our existing projects, focusing on the equivalence and balance of risk and return.

Innovation is the driving force for new business development. WINS Investment has been persisting in innovative exploration in the field of real estate finance. In addition to traditional development-oriented equity investments, in urban renewal, we focus on investment opportunities in office, industrial park, community commerce and long-term rental apartments in first-tier cities and new first-tier cities where the new economy is relatively developed.

For example, the project of Shanghai Kangjian Plaza is a typical urban renewal project of WINS in value-added held properties. Through the renovation and upgrade of the property and the positioning upgrade of the operation and investment, the comprehensive level of products and services is enhanced to empower the assets and increase the value of the assets.

In terms of asset securitization, the “No. 8 Bridge” project in Shanghai, a joint venture between WINS Investment and Gemdale Properties and Investment, is the first “asset-light” asset securitization product for a cultural and creative park in the history of domestic ABS, realizing  the scale product model of “asset-light” unsecured reasonable financing.

In March this year, the first public-offering ABS product of “Gemdale Strawberry Community”, for which WINS Investment acted as the general coordinator and transaction advisor, was successfully issued on Shanghai Stock Exchange with a shelf size of RMB 2 billion, which is the first “asset-light urban renewal” asset securitization product of long-term rental apartments on Shanghai Stock Exchange. 

For WINS Investment, the further implementation of the innovative financial product of real estate asset securitization, especially REITs, will help establish and normalize a sound and healthy market of investment and asset management, and will have a very positive impact on urban renewal, the development of new industry products and the upgrading of consumer services. The company will follow the rhythm of the market and policies to maintain the vitality and dynamics of innovation.

Matching of professional operation ability with investment ability. In the era of large operations, the prerequisite for WINS to select investment fields is its own sufficient operational capability and its ability to manage the underlying assets. We focus on asset projects such as industrial parks, new office, community commerce, and long-term rental apartments that have demand potential and value enhancement space.

“In these fields, the specialization requirements for each vertical category are very high. It is not only simple investment and financing, and purchase and sale trading, but also requires professional and refined asset management in long-term operation, so as to increase the value of the assets and thus obtain long-term returns.”Xu Yafeng said.

The industry needs a “long-run concept”

Investment ability cannot work without rigorous management and a decision-making process aimed at project value. As a “veteran” with more than 17 years of investment and financing of real estate projects and real estate capital operation, Xu Yafeng believes that, in addition to the ability to judge value, we also need to have a rational attitude toward the market.

He stressed that “rational attitude” has two meanings. On the one hand, when the market is overheated, we should not make blind investment, and we must adhere to our own investment rhythm and investment logic. On the other hand, when the market is relatively cold, we should not be too pessimistic, and we should actively seek market investment opportunities by enhancing our own ability.

Practitioners need to have the concept of “long run,” Xu Yafeng said, should adhere to the investment logic, and do not need to achieve an ambitious goal in the short term. It is a long-term business to maintain a proper speed and exert our own strengths.

Especially when the general tone of regulation remains unchanged, we should respond to regulatory requirements and changes in the market, and actively seek investment opportunities in the market.

“This year, with the change of the new pattern brought about by the impact of the epidemic, new consumer groups, the demand side and the users are undergoing a very big transformation in terms of office habits, living habits, consumption habits, etc., which puts forward new requirements for the projects and products we invest in. It also brings new opportunities for the industry, and inspires us to further develop products that can adapt to the new demand, cultivate our ability to review the content of the industry, tap our professional potential and improve our service, so as to adapt to the new demand and a series of changes brought about by the impact of the epidemic.” Xu Yafeng said.

In the future, with the continuous development of big data, cloud computing, Internet of Things technology and 5G, real estate companies will gradually become real “high-tech companies”. Real estate investment and asset management should also focus on digital management and the application of big data, so as to reduce business management costs and improve management efficiency.

In addition, Xu Yafeng said responsible investment is also crucial for us to become an international enterprise, which is often referred to as “ESG”, such as the use of green materials in the construction process of invested projects.

Xu Yafeng emphasized that every Gemdale employee should uphold the core value of “acting attentively and behaving credibly”, which is very applicable to corporate operation, business development and personal working guidelines. For his favorite field, Xu Yafeng admits that he will delve deeper into it once he identifies it. “Although I have been in the industry for 17 years, I am still learning new things every day.” Xu Yafeng said, “Real estate investment is very much like winemaking: Day-after-day precipitation brings about strong aroma and mellowness. Therefore, we should cling to our original intention in an industry and a brand.