Wang Jianlin "cuts meat" for the Chinese New Year

Source: WANDA HOTEL DEV Official Website

Author: Cao Anxun

Editor: Zhang Xiaoling

The annual conference of WANDA HOTEL DEV Group used to be the most anticipated "Spring Festival Gala" in the corporate world. Chairman Wang Jianlin once sang four songs at the conference, the most famous of which was the song "Fake Monk". With the added title of the richest man, it became a vivid footnote to the booming and vibrant real estate industry.

However, times have changed. As 2023 draws to a close, most real estate companies are keeping a low profile. The WANDA HOTEL DEV Group's 2023 annual conference, held on January 14th, quietly came to an end, without the grandeur and liveliness of the past.

According to the WANDA HOTEL DEV official website, Wang Jianlin, who was enthusiastic about singing at the annual conference, has now stopped performing. In the photos on the official website, he is seen solemnly summarizing the work of 2023 and deploying the work tasks for 2024.

According to insiders at WANDA HOTEL DEV, the company believes that the biggest storm of 2023 has already passed. However, the company still faces financial pressure, so the theme for 2024 is cost reduction and efficiency improvement. This is also one of the tasks mentioned by Wang Jianlin at the annual conference.

Behind the simplicity of the WANDA HOTEL DEV annual conference is the fact that although Wang Jianlin has resolved the crisis of the delisting bet, he still has to "cut meat" and sell assets to make ends meet.

This is Wang Jianlin's second time making a sacrifice for survival. Compared to other real estate tycoons, his situation is already quite good. This year, he no longer has to worry about debt collectors knocking on his door or running around to deal with debt crises. WANDA HOTEL DEV can now focus on its operations and make preparations for the new year.

Selling Assets

According to enterprise information platform Qichacha, on January 16th, there was a transfer of equity in the operation and management of Xiamen Huli WANDA HOTEL DEV Plaza. Xiamen Jinshengyang Real Estate replaced Zhuhai WANDA HOTEL DEV Commercial Management (referred to as WANDA HOTEL DEV Commercial Management) as the new wholly-owned shareholder of the company.

Even earlier, Wang Jianlin made multiple moves. From December 25th to December 29th, 2023, he sold four WANDA HOTEL DEV Plazas, namely Suzhou Taicang WANDA HOTEL DEV Plaza, Huzhou WANDA HOTEL DEV Plaza, Guangzhou Luogang WANDA HOTEL DEV Plaza, and Shanghai Jinshan WANDA HOTEL DEV Plaza.

The buyers of these four WANDA HOTEL DEV Plazas are Zhonglian Qianyuan Real Estate Investment Fund Management Co., Ltd. (referred to as Zhonglian Fund). It is a fund management company specializing in innovative real estate financial business with REITs as its core. Acquiring these four WANDA HOTEL DEV subsidiaries may just be the first step for Zhonglian Fund, and there may be more capital operations to follow. According to incomplete statistics from Wall Street News, since 2023, WANDA HOTEL DEV has sold approximately 10 WANDA HOTEL DEV Plazas in cities such as Xiamen, Foshan, Shanghai, Huzhou, Guangzhou, Xining, and Jiangmen.

This is truly lamentable.

WANDA HOTEL DEV Plazas were once the treasure and reliance of Wang Jianlin. He once boldly stated that when the rental income of WANDA HOTEL DEV reaches 100 billion yuan in a few years, WANDA HOTEL DEV Group will be able to "ride out any storm and sit securely in a fishing boat."

Those words are still fresh in our minds, but now everything has changed.

Prior to this, Wang Jianlin had already sold WANDA HOTEL DEV Pictures to Shanghai Ru Yi, which has Tencent as its background, and its major shareholder Ke Liming. He also introduced new investors such as Taimee Group to WANDA HOTEL DEV Property Management at the cost of a decreased valuation and diluted equity.

In just over a month, Wang Jianlin has lost several WANDA HOTEL DEV Plazas, China's largest cinema chain WANDA HOTEL DEV Pictures, and the flagship luxury hotel of WANDA HOTEL DEV, Shanghai WANDA HOTEL DEV Ruihua Hotel. He no longer has absolute control over WANDA HOTEL DEV Property Management.

According to the new agreement with the investors, Dalian WANDA HOTEL DEV Property Management's shareholding in WANDA HOTEL DEV Property Management will be reduced from the original 78.83% to 40%, and the shareholding of the Wang Jianlin family will be reduced to about 20%.

Behind Wang Jianlin's painful divestment before the Chinese New Year is not only the need to raise money to redeem the shares held by venture capital investors, but also the debt pressure faced by WANDA HOTEL DEV.

According to the interim report of Dalian WANDA HOTEL DEV Property Management's 2023 corporate bonds, as of the end of June 2023, Dalian WANDA HOTEL DEV Property Management had a total interest-bearing debt of 141.283 billion yuan, of which interest-bearing debt due within one year was 29.257 billion yuan. During the same period, Dalian WANDA HOTEL DEV Property Management only had approximately 16.015 billion yuan in cash and cash equivalents.

Dalian WANDA HOTEL DEV Property Management admitted that it has a large amount of outstanding interest-bearing debt, a high scale of debt due within one year, and certain debt pressure, and the public market refinancing channel has not yet recovered.

An individual who has invested in WANDA HOTEL DEV's fixed-income products stated that they have already had several rounds of discussions with WANDA HOTEL DEV regarding extending the maturity date. WANDA HOTEL DEV wants to extend it for three years, but investors cannot accept it, so negotiations are still ongoing.

The individual also mentioned that Wang Jianlin has shown great courage by selling so many assets, but the overall environment is not favorable, and everyone has to endure it slowly. "The foundation is still there, it just depends on the overall environment and regulatory changes." Regarding WANDA HOTEL DEV's move to sell assets in exchange for liquidity, industry insiders believe that it is a necessary step to survive. In 2017, Wang Jianlin also faced a liquidity crisis and decisively sold WANDA HOTEL DEV's tourism and hotel businesses at a discount to Sunac and Evergrande, successfully overcoming that challenge.

The New Year

Once upon a time, WANDA HOTEL DEV was a unique presence among Chinese real estate companies. Its annual conference was comparable to the Spring Festival Gala, with lively performances and a festive atmosphere.

In 2016, Wang Jianlin became China's richest man for the third time. That year, the WANDA HOTEL DEV annual conference was held at the WANDA HOTEL DEV International Resort in Xishuangbanna. Wang Jianlin sang four songs in a row: "The Fake Monk," "One-sided Love for a Flower," "The Shadow of the Fence," and "My Roots on the Grassland." His performance received applause from both inside and outside the industry, marking a highlight in Wang Jianlin's career.

But now, Wang Jianlin has to make another tough decision to ensure survival. With swift and large-scale asset disposals, he has demonstrated his determination and courage.

However, seeing the "cultural tourism empire" he built over the years crumble, Wang Jianlin cannot help but feel exhausted. The once energetic and spirited man no longer has the heart to celebrate.

Next, Wang Jianlin needs to focus on improving the company's operations and give it his all. Only by doing so can he withstand the financial pressure and lead this giant ship safely in the weak recovery of the commercial real estate market.

In this battle for survival, the changing economic situation, Wang Jianlin's will to survive, and his sincerity will determine the future of WANDA HOTEL DEV.

It is expected that as offline shopping centers recover, the performance of Dalian WANDA HOTEL DEV's commercial management will also improve.

In the first half of 2023, Dalian WANDA HOTEL DEV's commercial management achieved a total operating income of approximately CNY 25.452 billion, a YoY growth of 4.3%. The net profit attributable to shareholders was approximately CNY 6.729 billion, a YoY growth of 0.43%.

Huaxin Securities stated that the competition in the commercial real estate market is fierce, and there is a strong demand for professional commercial operation service providers. WANDA HOTEL DEV's standardized full-industry chain management process, diverse shopping mall operation experience, and extensive brand partnerships will further enhance its expansion capabilities and maintain its leading position.

At the same time, Wang Jianlin is also accelerating the implementation of the light asset strategy through asset sales.

According to insiders, although WANDA HOTEL DEV has sold Shanghai Ruihua Hotel, the hotel is still managed by WANDA HOTEL DEV and retains the WANDA HOTEL DEV brand. It will be operated as a light asset. "The new owner of Shanghai Ruihua Hotel is a diversified multinational corporation that recognizes WANDA HOTEL DEV's hotel management company. In the future, it is not ruled out that they will entrust other domestic and foreign hotels they own to WANDA HOTEL DEV for management." In addition, recently, Dalian WANDA HOTEL DEV's subsidiary, Dalian Xinda Meng Commercial Management, was established to mainly provide commercial complex management services. With a registered capital of up to CNY 16.207 billion, it also demonstrates Wang Jianlin's new ambitions and determination in the commercial management field.

The relationship between Xinda Meng Commercial Management, Zhuhai WANDA HOTEL DEV Commercial Management, and other strategic investments still needs further clarification.

In the real estate industry, fortunes rise and fall year after year. Some people resign and return to their hometowns, while others rush to the market day and night. Wang Jianlin still faces difficulties, but compared to other fallen peers, he is in a much better position with so many assets and businesses to rely on.

However, no matter what, Wang Jianlin can never return to the era of indulgence and satisfaction. The new real estate industry will be an era of steady progress, earning small profits through skilled management, and hard work.