R&F's 19.9 billion purchase of Wanda Hotel was split and listed after the hotel operation broke through?

As a third party, it suddenly broke into Wanda Sunac's big deal of the century, which made R&F Properties, a long-lost veteran property developer, make headlines again.

on July 19th, the historic drama of Sunac's acquisition of Wanda assets came to an end. In the end, Sunac took away 13 cultural tourism projects with 43.844 billion yuan, and R&F took over 77 hotel assets with nearly 2 billion yuan, which was more than 1 billion yuan cheaper than the previous acquisition price of Sunac.

With this acquisition, R&F will have more than 1 hotels and become one of the largest hotel operators in the world, and this distinctive label is also the way for R&F to break through in the real estate transformation period.

On July 2th, hujie, the director general of R&F, revealed in the conference call of China Merchants Securities that R&F had achieved a revenue of 4 billion yuan in the first half of the year, and the company would pay all of it with its own funds.

However, holding heavy hotel assets is a minority choice for real estate developers at present, especially when the hotel industry is facing difficulties since 214. If R&F wants to realize hotel profitability and stable cash flow in the future, capitalization and spin-off are the only way.

R&F's new label

At the signing ceremony of Wanda Rongchuang Fuli on July 19th, a dramatic scene was staged. The words R&F Property were removed from the background board of the event, and the meeting was extended by one hour. Now, it seems that the two directors of R&F may have succeeded in "bargaining" on the spot.

the final acquisition plan is the hotel project originally priced at 33.595 billion yuan and taken over by Sunac, which was acquired by R&F Properties for 19.96 billion yuan, and the number of hotels increased from 76 to 77.

hujie, the director-general of R&F Properties, revealed the process of the transaction negotiation, saying that it only took three or four days for R&F to get the news and sign the final decision, stressing that "only 6% off price was accepted" and "it was not decided until the last minute before signing the contract".

in r&f's view, this is undoubtedly a particularly good deal. The purchase price is only 6% off the net book value of the hotel, which is lower than the hotel cost.

according to r&f's announcement, 77 city hotels are located in the core area of the city, with an area of about 3.286 million square meters and 23,22 rooms, including four high-end Dalian Wanda self-operated hotel brands and several internationally renowned luxury hotel management brands (Westin, Hilton, etc.). The estimated net assets of 77 hotels are not less than 33.176 billion yuan.

hujie said that in addition to the low price, reducing the hotel cost and directly operating to generate income are also factors that R&F values in this acquisition. According to R&F's calculation, the development of 77 hotels will take 15-2 years, so the annual cost of this transaction will be saved by several billion yuan, and the initial promotion cost of the hotel will also be saved.

On the other hand, the acquisition of hotels will also help Fuli expand its own business map. The existence of Li Silian, one of the co-founders and chairman of R&F, makes R&F always bear the genes of Hong Kong-funded real estate developers, who pay more attention to holding properties and operating cash flow.

In R&F's property holding business, shopping centers and office buildings are not strong points. Relatively speaking, the company has more experience in high-end hotel management. Since 24, R&F has invested in the construction of high-end hotels, all of which are operated by internationally renowned hotel management companies such as Hyatt Group, Intercontinental Group, Hilton Group and Accor Hotel Group, and have strong competitiveness.

According to the data, R&F Property has opened and built 24 luxury hotels, mainly located in Guangzhou, Huizhou, Chengdu, Chongqing, Beijing and Hainan, all of which are 4-5 star luxury hotels. In 216, the company's hotel business achieved steady growth, and its operating income increased by 15.33% year-on-year to 1.362 billion yuan.

r&f properties said in its 216 annual report that it hoped to expand its high-end and high-capital investment portfolio including hotels at an appropriate pace. R&F believes that holding an investment property portfolio and providing reliable cash flow can counter the ups and downs of the economic cycle.

therefore, it is timely for r&f properties to include 77 Wanda hotels at a lower price. Yan Yuejin, director of the think tank center of Shanghai Yiju Research Institute, said that in recent years, R&F's continuous scale expansion and acquisition of hotel projects can expand the scale of its asset management and contribute to the improvement of its subsequent operating performance.

After taking over 77 Wanda hotels, R&F will hold more than 1 hotels and become one of the largest five-star hotel owners in the world, and can compete with Hilton, Marriott and other hotel groups in the future; This is also the self-breakthrough of this veteran real estate developer under the condition of stagnating scale and ineffective diversified transformation: through acquisition, it became a professional hotel operator.

The Road to Capitalization

R&F, which has always been low-key and calm, has made 2 billion yuan this time, which also makes the outside world question the source of R&F's funds.

before the acquisition, r&f's own debt ratio exceeded the industry average. The data shows that as of the end of March 217, R&F Group's consolidated assets totaled 232.54 billion yuan, liabilities totaled 185.368 billion yuan, and the asset-liability ratio was 79.32%. The ending balance of cash and cash equivalents was 24.522 billion yuan.

In this regard, hujie said that unlike Sunac's previous "debt acquisition", R&F only adopted asset acquisition for Wanda Hotel, and Wanda would divest its liabilities. "In the first half of the year, R&F completed a revenue of 4 billion yuan, and its own funds were sufficient. Payment within two years also reduced the financial pressure."

after the acquisition is completed, r&f's net assets will increase by more than 1 billion yuan, and its debt ratio will drop from more than 79% in 216 to 74.9%-75%, thus improving its balance sheet.

hujie also said that the total price of the acquisition was less than 2 billion yuan, and the total revenue of 77 hotels in 216 was 5.3 billion yuan. The four-year operating amount can cover the purchase consideration and increase the cash flow. If the hotels are all used for financing, they can already recover the purchase price.

It is noteworthy that hotels, as heavy assets with poor liquidity, rank lower in the profit index of China real estate industry. Although the hotel business of R&F Properties is growing steadily, the overall profit level is not optimistic.

according to the financial report of r&f properties, the loss of hotel operation in 216 was RMB 183 million, and that in 215 was RMB 167 million. The 76 hotels that acquired Wanda this time (excluding the new one) had operating profits of 55 million yuan and 87 million yuan in 215 and 216 respectively, and the return on net assets was less than 3%.

how to realize the long-term operation and profit of the hotel? Hujie said that after the acquisition, R&F plans to split and list the hotel in the future, which can solve the profitability problems faced by the hotel to some extent.

Yan Yuejin said that on the one hand, the reason why hotels are difficult to make profits lies in the increase of various competitive products and the oversupply; On the other hand, the property renovation and outsourcing management of the hotel itself will take up a lot of resources and funds, thus compressing the profit space of the hotel. In order to break through this situation, we should make efforts from two aspects: hotel operation and capitalization operation.

for r&f, it is necessary to increase the competitiveness of the hotel industry through capitalization. Specifically, R&F can be capitalized in three ways.

the first is to return to A shares; The second is to continue to refinance, especially after the acquisition of hotels, brand unified management needs all kinds of financial support; The third is asset securitization, and the hotel will be packaged and split into shares. On the basis of securitization, we can also make a light asset model.

Earlier, the management of R&F Properties revealed the plan to return to A shares in the third quarter of 217. In this regard, BOC International analyzed that the financing channels of real estate companies are limited by the government's austerity policies, and it is expected that R&F's listing plan will remain uncertain.