Real estate mergers, acquisitions heat up
Real estate mergers, acquisitions heat up
The real estate community was all at witter last week after learning that Vingroup (VIC) had transferred its upscale Vincom A Trade Centre in HCM City for VND 9.823 triillion (US$470 million).
Vingroup transferred the entire capital of one of its member companies, Future Company, to the Viet Nam Infrastructure and Property Development Group (VIPD), a domestic company that operates in many areas, including real estate investment and development.
VIPD now owns 1.1 million square metres of land in prime locations throughout Viet Nam, including HCM City and Da Nang.
As part of the transfer, Vingroup sold 100 per cent of Future Company's equity share in one-member limited services as well as commerce and investment units.
The Vincom A shopping centre, located in the heart of HCM City's downtown area, is bordered by Le Thanh Ton, Dong Khoi, Le Loi and Nguyen Hue streets in District 1's Ben Nghe Ward.
Vingroup's transfer of Vincom Centre A is considered to be one of HCM City's biggest Mergers & Acquisition-related transactions in recent years, with after-tax profits of nearly VND3.9 trillion (US$187.3 million).
Prior to this transaction, Vingroup had transferred all of its VND2.32 trillion worth of capital previously invested in VinCom Ba Trieu to the Bank for Investment Development of Viet Nam in 2006. It then sold VinCom Trade Center B to the Technological and Commercial Bank (Techcombank) in 2012.
Vingroup's recent transactions are having a ripple effect on other property investors. That is, they are learning from Vingroup to be more flexible in selling their valuable assets, particularly when they can get a good price. By doing this, they can accrue more capital resources for future projects.
Although the domestic property market remains inactive, particularly in the retail-property segment, real-estate transactions under the Mergers & Acquisition (M&A) form are thriving.
Many projects are changing hands as companies restructure their investment portfolios.
In the first quarter of the year, the Dat Xanh Real Estate Construction and Service Joint-Stock Company, for example, spent VND1.2 trillion to buy a 3.2-ha property project with 2,000 apartments from the Sai Gon General Service Joint-Stock Company.
Meanwhile, in the north, the Thu Duc Housing Development Corp pulled out of the Dong Mai-Ha Dong project in Ha Noi's Ha Dong District after selling its stake in the project for VND80 billion ($3.84 million).
VinaLand, a real estate fund managed by VinaCapital, sold its stake in an office building project at 30 Nguyen Du Street in Ha Noi, after four years of investment, for US$3.3 million.
The number of property projects changing hands this year is expected to increase by the year-end, meaning that the supply and demand of M&A transactions in the real estate sector would rise even further.
However, the legal status of property projects as well as accurate assessments will be important factors that decide the success of transactions made under the M&A form.
vietnamnews
