Editorial Department of this journal |Liu Zenglu Qin Jiali
Since the beginning of this year, insurance funds have continued to expand real estate investment, while shrinking the scale of equity investment in real estate enterprises. This means that insurers are making significant adjustments in their real estate investments.
On December 4, Haibao Life Insurance disclosed a major related party transaction announcement, and the company invested in the real estate project of 2-11 floors of Building T4 of Wuhan Guocai Center in the form of property rights, with a total transaction price of 20.3 billion yuan, with an average price of about 110,000 square meters. Similar to Haibao Life Insurance, Ping An Life, AIA Life, CCB Life, CPIC Life Insurance and many other insurance companies have recently disclosed large-scale real estate investment announcements, mainly involving commercial offices, industrial parks, commercial hotels, etc., with a related investment of nearly 40 billion yuan during the year.
Behind the continuous increase of insurance capital in commercial assets, the direction of real estate investment in the industry is changing, that is, reducing or withdrawing from real estate stock investment, increasing property assets, and "not being a shareholder but a landlord". This year, Ping An of China, Taikang Life Insurance, etc., have even cleared the equity of some leading real estate companies.
There is a view that this year, insurance funds are showing an investment logic of accelerating the withdrawal of real estate stocks and increasing real estate investment. Compared with investing in real estate stocks, it is more cost-effective to invest in real estate projects at present, which is compatible with the long-term capital allocation needs of insurance companies. Under the guidance of policies such as revitalizing stock assets, this investment style transformation may be further continued.
Large real estate investments are frequent
Insurers favor core commercial assets
Recently, insurance funds are still keen to "buy, buy, buy", but compared with the frequent sweeps in the capital market in the past, insurance funds are now showing greater interest in large real estate transactions.
According to the recent announcement of ESR, the largest real estate management company in the Asia-Pacific region, the company transferred six assets on November 27, with target properties in Xuzhou, Langfang, Jiaxing, Suzhou and Dongguan, with a total construction area of about 34960,000 square meters. Taikang Life Insurance is the actual buyer, and the total consideration of the transaction exceeds 2 billion yuan.
Taikang Life's takeover of a number of commercial real estate projects is just a microcosm of the accelerated investment in property rights by insurance capital, and this year, insurance capital continued to increase its position in high-quality real estate projects in core cities. According to the statistics disclosed on the official website of the Insurance Association of China, as of December 7, there are more than 10 large real estate investments in the actual investment stage of insurance companies this year, with a cumulative investment of nearly 40 billion yuan. If the planned investment stage projects are superimposed, the insurance capital involved a large amount of real estate investment of more than 70 billion yuan during the year (see attached table).
From the perspective of investment types, the current layout of insurance funds in the real estate sector is dominated by commercial hotels, industrial parks, warehousing and logistics, office buildings, etc. Since the beginning of the year, many insurance companies such as Ping An Life, AIA Life, Taikang Life, CPIC Life, China Post Life, and Dajia Life Insurance have been involved in large-scale property asset investment.
Among them, the latest transaction on insurance capital investment in real estate is Ping An Life's new investment in the D-03 and D-04 real estate projects in Beijing Lize Business District on December 6. The project has added 1500 million yuan, and the planned investment amount does not exceed 754.1 billion yuan, and the total amount of capital contributed is about 73$8.1 billion. For the real estate project in Beijing Lize Business District, Ping An Life started to invest in the layout as early as 2019, and in recent years, it has entered the stage of actual investment.
From the perspective of the seller, most of the real estate companies facing the cash flow crisis put commercial assets on the shelves. For example, in September this year, Chinese Life took over the Zhuhai Jumbo complex project of Shimao Group for a consideration of 3.9 billion yuanDajia Life Insurance took over the equity of Shanghai Wanda Plaza Real Estate. Previously, we have taken over three projects under Wanda Commercial Management: Shanghai Songjiang Wanda Plaza, Jiangmen Taishan Wanda Plaza and Qinghai Xining Wanda Plaza.
In the buyer's market, "Ping An" has always been the main insurance capital investing in real estate. In January this year, Ping An Life disclosed its investment in six commercial office real estate projects including Raffles City in Shanghai, with the funds ** being the traditional portfolio of life insurance, and the balance of the account's contribution to this project was about 2997.3 billion yuan, and the total investment amount of the project is expected to not exceed 33 billion yuan.
In addition, according to the official website of the Insurance Association of China, Ping An Life is implementing large-scale real estate investment this year, as well as the E-06 plot project in the southern area of Beijing Lize Financial Business District, the C2 commercial finance project of E-01 and E-05 plots of Lize Road in Fenghe District, Beijing, the D-03 and D-04 real estate projects in Beijing Lize Business District, and four industrial park projects in Beijing and Shanghai, etc., with a total investment of 25 billion yuan.
This year, the layout of real estate continued to diversify. In addition to asset acquisition, some insurance institutions directly entered the market to acquire land. For example, at the end of October, Taikang Life Insurance was priced at a reserve price of 11.2 billion yuan won the bid for a plot of land in Huangpu District, Guangzhou, for the construction of hospitals and elderly care services.
In the view of Xue Jianxiong, president of Youtaocheng, the recent increase in insurance capital is related to the rental yield of assets in core cities. "Compared with housing prices and the shrinking value of real estate companies, the rental rate of core commercial assets in first- and second-tier cities is rising, and the net rate of return of many assets can reach 5%-8, or even 10, which is relatively stable and safe. He added to this magazine, "However, as the oversupply of commercial hotel parks in first- and second-tier cities becomes more and more obvious, rents may be significant in the future." That is, it is cheaper to buy today, and it may be cheaper in a few years. ”
On the one hand, after nearly two years of in-depth adjustment, the value of many real estate projects has fallen into a trough, and the current investment is very cost-effective, in line with the policy orientation of revitalizing stock assets, and is also compatible with the long-term capital allocation needs of insurance companies, which can be described as a low-risk window period. On the other hand, compared with investing in real estate stocks, direct investment in high-quality real estate projects by insurance funds can better control risks, and is expected to bring better long-term investment returns in the case of macroeconomic recovery.
He added, "For the selection of real estate projects, the layout of insurance funds mainly involves high-quality operational projects such as office buildings, industrial parks, logistics and warehousing, which have the characteristics of good value preservation and appreciation, stable cash flow income, etc., and have a high degree of matching with the attributes of insurance funds." ”
The other side of the seesaw
Insurers have reduced their investment in real estate stocks
In contrast to the increase in property rights assets of insurance funds, with the shrinking profits of real estate companies and the continuous fluctuation of real estate stocks, insurance funds that frequently occupied the status of "second shareholders" of real estate companies in the past began to withdraw from real estate stocks, and some insurance institutions have successively cleared their positions in leading real estate companies.
This year, Taikang Life Insurance made the first action on Poly Development, which has been holding shares for 7 years. According to the announcement of Poly Development in November, the company's second largest shareholder, Taikang Life Insurance, during the implementation of the plan, Poly Development 8176970,000 shares, accounting for 068%, and Taikang Life's shareholding in Poly Development increased from 705% to 631%, and through this ** cash out about 11800 million yuan.
Ping An of China, the second shareholder of the former "first-scale real estate enterprise", has recently cleared its position. In November this year, the news that Ping An of China would acquire the insured real estate company and inherit its debts circulated in the market, but according to Ping An's subsequent clarification announcement, Ping An of China does not have any transaction plans or discussions related to this, and does not currently hold a stake in the real estate company. Looking back at the 2023 interim performance report of the leading real estate company, as of the end of June, Ping An held 5 shares in it37%, the company's second largest shareholder, until August 11, the Hong Kong Stock Exchange disclosed data showing that Ping An still holds 499% shareholding. This means that in the past two months, Ping An has emptied the shares of the real estate company.
Behind the liquidation of some leading real estate companies, the industry is cautious about real estate stocks as a whole. According to wind data, as of the end of the third quarter of this year, the number of outstanding shares of listed real estate companies held by insurance institutions was 5.9 billion shares, a decrease of 2% from the middle of this yearThe value of the holding was about 36.7 billion yuan, a decrease of 6 from the middle of this year9%。
Specifically, as of the end of the third quarter, insurance institutions held more than 20 real estate companies, of which Gemdale Group, China Fortune, Financial Street, Poly Development, and OCT A were the top five real estate companies, and the number of shares held by insurance institutions was 15400 million shares, 9800,000,000,000,000,0003.9 billion shares, 71.9 billion shares, 56.9 billion shares, shareholding ratio. 06%, the insurance capital of the backing bureau includes Fude Life Insurance, Ping An Life, Dajia Life, Qianhai Life, etc.
In recent years, the above-mentioned insurance funds have still carried out varying degrees of ** on the former heavy real estate enterprises. Stretching the timeline, since 2021, Doujia Life Insurance has ** Gemdale Group 6 times, and its shares have increased from 2043% to 543%；Qianhai Life ** OCT's shareholding ratio increased from 754% to 694%；Taikang Life Insurance has cleared Sunshine City.
However, among the insurance companies that have left the market, the majority of them have obtained floating profits on investment. Taking Taikang Life Insurance, which has 81.76 million shares of Poly Development this year, as an example, when Taikang Life invested in Poly Development in 2016, the price of the shares was about 819 yuan shares, based on the calculation of 14 yuan shares in the third quarter of this year, Taikang Life Insurance has achieved about 47.5 billion yuan floating profit.
In Bai Wenxi's view, the current investment strategy of insurance capital in the real estate field is related to the risk control and diversified investment needs of insurance companies. According to reports, compared with the current uncertainty of real estate stock investment, the property rights assets in the core areas of first- and second-tier cities have stable rental income and greater appreciation potential, and the current insurance capital is optimistic about the long-term income of such assets.
The investment in property rights of leading insurance companies has risen
The logic of real estate investment has changed
Although in recent years, insurance companies have become the first real estate stocks, judging from the layout of leading insurance companies, insurance funds have not really withdrawn from real estate. At present, the real estate investment path of insurance companies covers various methods such as property investment, debt planning, equity investment, etc. As far as leading insurance companies are concerned, property investment is their main investment path.
Taking Ping An, China, which has the largest real estate investment scale in the field of insurance capital, as an example, according to the company's interim results announcement, as of the end of June 2023, the balance of real estate investment in the company's insurance fund portfolio was 20939.3 billion yuan, accounting for 45%。This type of investment is dominated by real property investment, accounting for 75% of real estate investment6%, that is, it is mainly invested in rent-collecting properties such as commercial offices, logistics real estate, industrial parks, and long-term rental apartments, so as to match the duration of liabilities, contribute relatively stable rent, dividends and other income, and obtain asset appreciation.
The layout trend of leading insurance companies also reflects the recent shift in the preference of insurance funds in the field of real estate investment. According to the corporate performance announcement, in 2021, 2022 and the first half of 2023, the balance of real estate investment in Ping An Insurance's capital portfolio will be 216.1 billion yuan, 204.6 billion yuan and 209.4 billion yuan respectively, during which the real property investment will reach 100.6 billion yuan, 118 billion yuan and 158.3 billion yuan respectively, accounting for % of the overall real estate investment balance. In addition to the company's property investment increasing year by year, the proportion of debt investment and equity investment has been declining year by year.
At present, the yield of some real estate projects disclosed by insurance companies is performing well. According to the company's performance announcement, in the first half of this year, the nominal investment rate of return in the real estate industry was 4 in Ping An's creditor's rights plan and creditor's rights wealth management products91%；Among CPIC's private market financing instruments, the nominal investment yield in the real estate sector was 48%, the yield is second only to non-bank finance.
In Bai Wenxi's view, under the background of policy guidance such as revitalizing stock assets, the investment trend of insurance capital ** real estate stocks and increased property rights assets may continue for a period of time: "At present, insurance funds are adjusting their investment strategies and seeking more stable investment channels. To measure the prospect of insurance capital in the real estate sector, it is necessary to fully evaluate the economic benefits and risk-return of the selected projects. ”
(This article was published in the December 9 issue of Market Weekly.) The views in the article only represent the personal guests and do not represent the position of this magazine. The mention of *** in this article is for analysis only and does not make investment advice. ）