Although it has always insisted on not going public, Lian Dong has not given up the way of relying on capital operation to promote the business expansion of its industrial parks.
On March 1, the closed infrastructure **investment** (hereinafter referred to as "Liandong Industrial Park REIT") of Zhongjin Liandong Science and Technology Innovation Industrial Park was officially declared to the Shanghai Stock Exchange and accepted, and if successfully issued, it will become the first public REIT of a private enterprise park in China. This also opens a new channel for Lian Dong to "list assets".
In terms of the underlying assets alone, it is not difficult to see that Liandong has made great efforts for the smooth issuance of this REIT.
According to the data, "the initial assets of Liandong Industrial Park REIT include three industrial park projects, including Beijing Daxing Science and Technology Innovation Industrial Park, Beijing Mapo Science and Technology Park Phase I, and Beijing Fangshan Odyssey Industrial Park, all of which are located in Beijing Zhongguancun National Independent Innovation Demonstration Zone, and they are all production-oriented standard industrial plant projects that Liandong specializes in."
The total construction area of the above projects is about 19840,000 square meters, with a leasable area of about 19440,000 square meters. As of the end of 2023, all three projects have been in operation for more than 3 years, with the longest operating life being 55 years (Beijing Mapo Science and Technology Park Phase I), with a minimum operating period of 35 years (Beijing Fangshan Odyssey Industrial Park).
Combined with the occupancy rate performance, the operating performance of the three asset projects is also relatively stable, with the occupancy rates of the three assets in the past three years being .59% and 9817%, and the average contract day rent is 159 yuan square meter day, 168 yuan square meter day and 174 yuan square meter day. The stable occupancy rate also ensures the stable income of the park to a certain extent. It was also disclosed in the prospectus that the annual rental growth rate of the three projects** is expected to be 3% during the period.
In addition, as of the end of 2023, the proportion of leased area with a lease term of 3-5 years in the leased area of the project reached 6664%, with a term of more than 5 years, the proportion of leased area accounted for 3207%。
However, it is worth noting that the above three projects will account for 23 tenants due at the end of this year98%, and 42 after 202584%, there is still a certain risk of occupancy rate fluctuations. However, considering that the top 10 tenants of the asset project have a relatively low proportion of leased area, the risk of large-scale surrender of a similar "Zheku" event is low.
Industry analysts also pointed out that the current tenants of the project are mainly small and medium-sized, production-oriented, and scientific and technological enterprises with strong leasing demand, and Liandong, as a veteran enterprise in the industrial park, has sufficient experience in lease renewal and tenant reserves, but Liandong still needs to be vigilant in this regard, and ensuring the stability of the occupancy rate has always been the primary proposition of the operators of the industrial park, including Liandong.
Of course, thanks to the current good operating performance, Liandong's three initial asset projects have also been valued at a high valuation of 172 billion yuan, the average valuation unit price reached 8,670 yuan square meters, of which the valuation of Daxing Science and Technology Innovation Industrial Park was as high as 11,123 yuan square meters.
This is also the highest valuation record for public REITs in domestic factory parks. According to the data, the valuation unit price of the Shanghai plant of Lingang Industrial Park REIT and Dongjiu Industrial Park REIT is 6,420 yuan and 5,422 yuan respectively.
The data also disclosed that the value-added rate of the above projects reached 16446% with a capitalization rate of 5 in 202459%；Liandong Industrial Park REIT expects a dividend return of 4 in 202443%, with a dividend return of 4 in 202544%。Undoubtedly, Lian Dong has shown its greatest sincerity to the market.
If the REIT is successfully issued, it will open up a channel for Lian Dong to exit its assets, and will also help it further promote the sustainable development of its business scale.
According to public information, since 2003, Liandong started its industrial park business in Beijing, and by the end of 2023, Lian Dong has laid out 526 industrial parks in 94 cities across the country, of which 90% are located in first- and second-tier key cities, 80% are in national development zones, and 19,700 enterprises have been served.
It must be pointed out that industrial parks are a market that requires a lot of investment, long-term operation, and the sales ratio is limited by policies, so many park operators are facing greater financial pressure.
It is understood that at present, Liandong's cash flow is still in a stable state, and the overall debt ratio is below 60%, but Liandong still hopes to significantly reduce the leverage ratio.
Prior to the issuance of REITs, Lian Dong also tried other capital exit channels, including cooperating with foreign private equity firms, issuing CMBS, etc.
It is understood that Lian Dong has been in contact with Blackstone, Macquarie, KKR, Apollo, Hillhouse and other institutions, and established "Yuepu" in order to withdraw from Beijing, Shanghai and other self-owned parks, but in the end the cooperation was not successful.
In the field of capitalization, Liandong issued a CMBS of 1 billion yuan in 2019, named "Guojun Asset Management-Liandong U Valley Phase I Asset-backed Special Plan", and became the first private standard factory rental CMBS successfully issued in China's industrial real estate market at that time. The basic assets are 20 sets of office buildings, factories and equipment rooms in Fnetlink Industrial Park, Tongzhou District, Beijing, with a total construction area of 11420,000 square meters, with a property valuation of 1.6 billion yuan.
Nowadays, with the maturity of the public REITs channel, it has also added new funding channels for the industrial park industry, which is conducive to the high-quality development of industrial park projects.
It is understood that the fundraising of the Liandong Industrial Park REIT will be invested in 12 industrial park projects, mainly located in Beijing, Tianjin and the adjacent Langfang area. Among them, it will focus on the Liandong U Valley Yuanda Residential Green Building Auxiliary Base Project and the Liandong U Valley Langfang COFCO Tunhe Project, with an investment amount of 7 respectively$6.8 billion and $75.5 billion yuan.
Although the first REIT is still in the acceptance stage, Lian Dong is already planning a follow-up expansion plan at the same time.
It is understood that the original owner of the Liandong Industrial Park REIT is Beijing Liandong Jinyuan Management Technology Co., Ltd., which is the core operating entity of the self-sustaining industrial park under Liandong.
Although the company was only established in November 2022, by the end of 2023, Lian Dong had incorporated 51 of its subsidiaries into the main body through transfer, equity acquisition and new establishment, corresponding to the leasable area of the industrial park of 298510,000 square meters.
At present, the self-sustaining parks under the name of Liandong Jinyuan are located in Beijing, Shanghai, Guangzhou, Suzhou, Chengdu, Hefei, etc.
First- and second-tier cities, of which 34 industrial parks are located in first-tier cities such as Beijing, Shanghai, and Guangzhou, accounting for 7391%。In Beijing, the area of the self-sustaining park is as high as 116980,000 square meters, accounting for 392%。
From 2021 to 2023, Liandong Jinyuan's revenue will be 49.4 billion yuan, 56.8 billion yuan, 65.7 billion yuan, of which operating lease income accounted for the highest proportion, respectively 41.9 billion yuan, 51.1 billion yuan, 64 billion yuan. With a revenue growth rate of 15% for two consecutive years, this report card is quite impressive.
But at the same time, the recruitment letter also disclosed that under the premise of stable operating performance and good income, the first period will continue to have a net loss in the next two years, with a net loss of -11.81 million yuan in 2024 and a net loss of -10.86 million yuan in 2025. In addition, the scale of Liabilities of Liandong Jinyuan has also increased in tandem with the scale of assets, and the total liabilities of Liandong Jinyuan from 2021 to the end of 2023 are 675,927190,000 yuan, 745,736450,000 yuan and 800,982670,000 yuan, the asset-liability ratio was .38% and 6494%。
Will this deter investors? How does Lian Dong plan to mitigate the risks? All kinds of doubts are waiting to be verified by the market.