Hong Kong Island's New Rich Era

Chapter 287 A New Round of Overseas Investment

Huangpu Group suddenly announced two pieces of news: a force 12 typhoon was blowing in Hong Kong.

The first is to issue convertible bonds worth HK$50 billion, and major shareholders have subscribed for HK$33 billion.

The second is that it will set up a private equity fund that specializes in investing in overseas real estate activities.

Both pieces of news are incredible: The first piece of news is incredible that when Whampoa Group issues bonds in Hong Kong, it will face Hong Kong investors.

When other companies issue convertible bonds, they are generally targeting overseas markets, such as US dollar bonds and Samurai bonds. This is because Hong Kong is too small and they are worried that the issuance will not be successful.

Every time the Whampoa Group issues bonds, it issues Hong Kong dollar bonds in Hong Kong, which shows the confidence of Mr. Liu Zhicheng.

The second incredible news is that there has not been a dedicated "real estate fund" in Hong Kong yet. This is the first time; more importantly, this is a "real estate fund" investing overseas.

Of course, with Liu Zhicheng's credibility and reputation, people responded immediately in droves.

In the eyes of Hong Kong investors, following Liu Zhicheng, who has the ability to turn stones into gold, must be a very profitable thing.

Friday, September 2st.

Today is the day of the "Diamond Hill Land King" auction, and heads of major real estate companies and Hong Kong reporters have flocked there.

Strictly speaking, today's auction is not considered a 'government land auction' because there is only one 'king-level piece of land'.

Generally speaking, the Hong Kong government will announce the annual government land auction plan in a certain month every year, and the auction will begin at that time.

The purpose of the Hong Kong government's auction of "king-level" land is actually to raise prices and create momentum for the subsequent auction of government land.

This also fully demonstrates that the Hong Kong government is very contradictory. It wants to quell public grievances and crack down on housing speculation, but also wants to make a fortune from the auction of government land.

After all, 70% of the Hong Kong government’s finances rely on real estate!

When it comes to the land auction at the "land king" level, Liu Zhiben wanted to be in charge personally, but then he thought that if he went there in person, the price would most likely be raised by others.

Because in the past year, the Huangpu Group has given people the impression that it is no longer as aggressive and determined to win at auctions as before.

Although they are also big friends of real estate, they are only friends with Sun Hung Kai Properties and Cheung Kong Holdings. Will they consider whether the price is expensive?

Therefore, if Liu Zhicheng were to be in charge personally at this time, it would inevitably give people a feeling that he attached great importance to the auction, which would be detrimental to the auction.

This piece of land is indeed very good. It is located at the foot of Lion Rock, at the entrance of the tunnel between Kowloon and Sha Tin in the New Territories (Kowloon side), with an area of ​​approximately 28 square feet.

According to the announcement from the Hong Kong Government's Planning Department, five residential buildings with a total area of ​​120 million square feet can be built (about 1500 residential units), and 65 square feet of commercial space can be built (low density/low-rise buildings), and there will also be a nice landscaped public garden.

Liu Zhicheng calculated that if the houses could be sold starting in 1995 and sold out in the first half of 1997, the average selling price could reach 6000 yuan per square foot, which would bring in 72 billion Hong Kong dollars in cash;

Based on the commercial space price of HK$1 per square foot, it is worth HK$65 billion (simple estimate).

This is a big project totaling HK$137 billion!
The total construction cost is HK$20 billion, and with interest and taxes, it won’t even reach HK$30 billion.

The land cost of HK$50 billion is worth it if anyone can compete with Whampoa Group!
Of course, 50 billion Hong Kong dollars is impossible. The reserve price of this land is 22 billion Hong Kong dollars. Generally speaking, a premium of 7% is already a sky-high price.

Thinking of this, Liu Zhicheng called Hao Qingwen and said, "Lead your team to the auction this afternoon and get the land back.

As for the price, a 70% premium should be fine. 30% higher is my bottom price, so you can call me, but be careful!"

In this day and age, with mobile phones now available, you can naturally call the auction venue to apply outside.

Hao Qingwen said: "Well, I understand! Speaking of which, this time we may have to be wary of the real estate trust, that is, the Bao Yugang family. They are now landing with all their strength, and they are ambitious and ambitious."

Hearing this, Liu Zhicheng said nonchalantly: "They have abundant funds, and so do we. There is no need to worry. You just need to use some tricks, but be determined to win!"

Hao Qingwen laughed. He made tens of billions of dollars from the U.S. stock market last year. How could he not just make money without doing anything?

And judging from the boss's appearance, he is very optimistic about Microsoft, General Dynamics and Citibank, and seems to plan to hold them for the long term.

"Okay, I'll get the job done!"

...............

Hong Kong Government, auction house.

2 pm.

Hao Qingwen walked into the auction with several senior staff members, and as expected, they attracted everyone's attention. When everyone saw that Liu Zhicheng was not there, they immediately felt a lot less pressure.

In fact, although the Whampoa Group is wealthy and powerful, it is not invincible. After all, everyone has money;

However, Liu Zhiben himself is a bit "arrogant". If he were to arrive at the scene, he might not care about the price. By then, everyone would be afraid of winning the bid at a high price, but also afraid of being absent.

Not easy!
Under the leadership of Hao Qingwen, some people even feel that the Huangpu Group has placed its focus on overseas and mainland China.

Everyone still greeted each other. No matter how intense the situation would be, everyone was still friendly in private.

Even if there is competition at an auction, no one will really care about it afterwards. After all, there are so many auctions every year, and it is an eternal truth that the highest bidder wins, and no one will deliberately raise the price.

Today's auction can be regarded as a 'barometer of Hong Kong's property market'. If the premium is high, it will also be beneficial to real estate companies because it will drive up real estate prices.

Generally speaking, a 40% premium is considered the threshold for a good market, and a 70% premium is a sign of a booming market.

The auction officially begins.

Everyone raised their hands, which was very encouraging for a while. Hong Kong real estate may see another year of growth this year.

very competative!
In the end, only the Cheung Kong Group, Whampoa Group, New World Development and Nan Fung were left.

Soon, New World Development was defeated. Cheng Yutong said to himself: "It is still more cost-effective to buy hotels abroad. So many hotels are only 50 billion Hong Kong dollars, and this piece of land is already 30 billion Hong Kong dollars. It's unbearable!"

His subordinates could only smile in agreement. In fact, New World Development has fallen behind because it does not have enough reserve land!
Of course, New World Development is also considered a large real estate developer because it owns the New World Centre in Tsim Sha Tsui and the Convention and Exhibition Plaza in Wan Chai (which is also beginning to expand), but it cannot be called a 'large-scale development real estate developer'.

There are only four large-scale real estate developers in Hong Kong, namely Whampoa, Cheung Kong, Sun Hung Kai and Henderson Land, which account for 55% to 70% of Hong Kong's property sales each year.

"32 billion Hong Kong dollars!" Hao Qingwen held up the sign calmly.

He did not think of getting it for less than HK$35 billion because he could see that the biggest competitor might be the property trust.

Since Cheung Kong Group does not like to rent out properties and has sufficient land reserves, it will definitely consider the issue of whether it is cost-effective.

Nan Fung Group is not worth mentioning. How much of its money can withstand being squandered?

The property trust wanted to develop into a real estate developer, and since the land had a commercial area of ​​65 square feet, it was very eager to acquire it.

"32.1 billion Hong Kong dollars." Wu Guangzhen's face showed a hint of desire.

In Wu Guangzhen's opinion, this piece of land will be able to add a very good shopping center, so he is determined to acquire it.

The next competition has just begun in earnest.

All of a sudden, all the major real estate developers were watching the excitement. At this moment, they were in a particularly relaxed mood and secretly thanked God that they did not follow suit. After all, the two companies were likely to be fighting fiercely today.

"35 billion Hong Kong dollars." Hao Qingwen also sighed in his heart that he might lose money today. If the price premium is %, he will really have to call and ask.

"35.2 billion Hong Kong dollars." Wu Guangzhen was also very shocked. Is this a price that a senior executive like him can decide? Isn't he afraid of being scolded when he returns?

"35.3 billion Hong Kong dollars." Hao Qingwen continued to shout calmly.

The boss actually has a 100% budget in mind, otherwise he wouldn't have called him and offered a 100% premium.

It’s still early, Hao Qingwen comforted himself.

"38.2 billion Hong Kong dollars." Wu Guangzhen felt heartbroken.

"38.5 billion Hong Kong dollars." Hao Qingwen felt that it was a big increase.

"38.6 million Hong Kong dollars."

"39.2 billion Hong Kong dollars." Hao Qingwen shouted again. He had seen hope.

Sure enough, Wu Guangzhen fell silent, and when the auctioneer dropped the hammer for the second time, he did not bid again.

“Sold for HK$39.2 billion!”

Hao Qingwen breathed a sigh of relief and clasped his fists towards Wu Guangzhen, appearing very sincere.

So the talent reacted and realized that Liu Zhicheng must have given the reserve price, and it should still be within the reserve price range, otherwise Hao Qingwen would not be so modest. Wu Guangzhen forced out a smile and dealt with it.

He wanted to emulate his father-in-law's Shanghai style, but found that it was simply not feasible.

The land fee is nearly 40 billion Hong Kong dollars, plus the construction costs and taxes, the project may require an investment of more than 60 billion Hong Kong dollars.

How much does this cost?

For a moment, Wu Guangzhen couldn't help but sigh that it was not an easy thing to meet Huangpu Group at the auction.

When Liu Zhicheng learned that the Diamond Hill land king was sold for 39.2 billion Hong Kong dollars (35.3 billion Hong Kong dollars in the previous life), although he was a little surprised, he was satisfied and encouraged Hao Qingwen.

He had a 100% budget in mind, or even a 120% budget, after all, he needed investment; a 120% budget for land would also make more money than investments in Europe and the United States.

What's more, with just some planning, this kind of project can compensate for the extra land fees.

For example, by arranging the sales time, for example, signing a long-term lease contract (with a more favorable price) before July 1997, you can make more money.

As for whether he would be scolded, Liu Zhicheng was not afraid at all. People have different perspectives. He is the chairman of the board of directors of a listed company and needs to be responsible for 60,000 to 70,000 shareholders.

It can be said that before the second half of 4500, Liu Zhicheng had at least forced the Whampoa Group to sell off tens of billions of assets (currently the annual property transaction volume is billion) and invest in the European and American markets.

Of course, core office buildings and shopping malls will not be sold.

...............

The beginning of March, Manhattan, New York.

Huangpu Group North America and Hongli Investment Management have moved to their own property - 245 Park Avenue.

In the conference room, Liu Zhicheng looked at the senior staff who were mixed with Chinese and foreign people and thought that this configuration was very good;
Many of the foreign senior staff were former managers of Olympia York Company, and joined Huangpu Real Estate Investment Management through Richman’s introduction.

"Let's start the meeting. Let's first talk about the project goals of the 'Huangpu No. 1' investment!" Liu Zhicheng said calmly.

In late February, Huangpu Group successfully raised a US$5 million commercial real estate fund privately. Liu Zhicheng handed the fund over to Huangpu North American Real Estate Investment Management Company for management.

Of course, Liu Zhicheng is personally planning the investment direction.

Larry, Vice President of Huangpu North American Real Estate Investment Management, reported: "Boss, according to the company's investment direction, we have found a good project."

Liu Zhicheng nodded and signaled to continue. The so-called general direction of investment is to give priority to commercial properties around New York University, and preferably retail properties, that is, shopping malls and shops.

He plagiarized Buffett's idea, thinking that if the school could not be moved, the surrounding retail properties would naturally become popular soon.

Larry reported earnestly, "RTC Group (American Asset Restructuring Trust Company) revealed last month that a retail property in New York University City is going to be sold. The current unleveraged yield of the property is 10% (that is, it is purchased without a loan)."

The yield without a loan is 10%, which is actually on the low side, meaning that if you purchase with a loan, after deducting the interest expense, the yield may be even lower!

Just when Liu Zhicheng felt that the situation was not particularly ideal, Larry's next words made him see the light.

“Through our investigation, we found that the largest customer of this retail property occupies 20% of the rental area.

But they only pay $5 per square foot, while other tenants pay an average of $70 per square foot.”

This is how we attract traffic. The biggest customer must be a large enterprise that has its own traffic, which is why the original property owner made such concessions.

This situation is very common in commercial real estate.

For example, the early office buildings of the London 'Canary Wharf' project also have a large number of tenants paying very low rents, which is a necessary operation in order to boost the prosperity of the entire project.

Of course Hong Kong doesn't need it. Giving a 20% discount to big companies is already a big concession, since land is extremely expensive in Hong Kong.

The rent in Causeway Bay is twice that of Fifth Avenue in Manhattan.

Liu Zhicheng immediately asked, "When will the contract of the largest tenant end?"

Larry said, "Nine years left."

When the nine-year term expires, it is impossible for this largest tenant to move away. After all, long-term old customers are a great asset.

So, if the rent is calculated based on the 2001 rent, the yield over these nine years can be instantly increased to around 35%, because the rent of other tenants is also increasing during this period.

US$70 per square foot per month is really too cheap, while shops in Causeway Bay are already around US$200 to US$300.

Once the economy of the United States picks up (which should start this year), the rents of retail properties near university towns will naturally increase.

Liu Zhicheng nodded and said, "Go on, I'm very interested in this project!"

Larry nodded happily and introduced the property's geographical location, total area, and total selling price one by one.

The total area is 9.02 square feet, and the selling price is between US$4 million and US$4.2 million.

Very ideal price! If the European and American economies had not been in a state of decline for three or four years, it would not be so cheap there.

Liu Zhicheng was always decisive in his actions and immediately asked, "Those of you who have experience in retail property management, please raise your hands!"

A number of senior North American executives raised their hands, about 70% of them. They all seemed to be senior executives with rich experience in commercial real estate management.

In fact, Huangpu Group’s commercial real estate management experience has also grown into a world-class team.

In recent years, we have not only introduced foreign management experience, but also formed our own management system based on local conditions.

Liu Zhicheng nodded and said, "Okay, then Vice President Larry will take the lead and form a team to complete this transaction.

This transaction can be financed at 50%, and when the time is right, we will reset the mortgage loan to optimize the profit margin.”

Larry nodded happily and said, "Okay, we will definitely complete it successfully!"

Next, Liu Zhicheng arranged for everyone to continue searching for commercial real estate projects in Manhattan and discussed management issues.

During this period, the professionalism displayed by Liu Zhicheng opened everyone's eyes and they secretly sighed that Liu Zhicheng was worthy of being the founder of a large real estate company in the world.

Liu Zhicheng's goal for the US$5 million "Whampoa No. 1" private equity fund is to increase the influence of the Whampoa Group and himself in Hong Kong.

The rate of return doesn’t actually need to be too high; more than 15% per year would satisfy everyone.

Many shareholders of this fund include government officials and business celebrities. In short, they occupy the absolute core power in Hong Kong.

If nothing unexpected happens, 1% of the million US dollars of funds for "Huangpu No. " have been spent (% is a loan), and the remaining % of the funds only need to be invested this year.

As for subsequent projects, Liu Zhicheng asked everyone to expand the scope. Retail properties on Fifth Avenue, office buildings in Manhattan, and retail properties around universities can all be considered, but they need to be discussed and approved.

After finishing his work in North America, Liu Zhicheng did not return to Hong Kong, but came to London, the city where the sun never sets.

a few days later.

After resting for a night at the London Manor, Liu Zhicheng started his day's work.

Work, no playing with girls; play with girls, no work; this is Liu Zhicheng's motto.

Liu Zhicheng's motorcade drove towards Canary Wharf, the project that had been haunting him.

It's not because of how much money this project can make (of course it can make a lot of money), but because it is a milestone project, like a 'landmark building' in a city.

For example, his investment in America, "Eight Skyscrapers in Manhattan" is his representative work, a masterpiece that people talk about with relish.

His masterpiece in Europe is, of course, the 'Canary Wharf' project.

Of course, at present it is definitely Richman’s masterpiece, and Liu Zhicheng is at most an investor.

But Liu Zhicheng knew that Richman was just working for him.

A convoy of Rolls-Royces drove over a bridge into Canary Wharf.

It is located on a peninsula in the Isle of Dogs area, surrounded by the Thames on three sides and covers an area of ​​0.35 square kilometers (380 million square feet, equivalent to 1.6 Taikoo Shings in Hong Kong).

Canary Wharf belongs to the Docklands district of London, 5 kilometers east of downtown London. The Docklands district covers an area of ​​8.5 square kilometers.

In the future, Dog Island will house most of the area's commercial buildings, and Canary Wharf will become the de facto core of the Docklands business district.

Currently, the Canary Wharf project has completed 8 high-rise buildings and approximately 650 million square feet of office space, but less than half of the area has been developed.

(End of this chapter)