SMM: on the evening of September 1st, Yuexiu Real Estate disclosed that it had exercised Yuexiu Real Estate options to acquire 51% of each of the two new rail transit projects. At the same time, the company has nominated Guangzhou Urban Construction and Development Nansha Real Estate Co., Ltd. (buyer or Guangzhou Urban Construction) to acquire equity interests in Shuixi Target Company and Zhenlong Target Company (collectively: target holding company). And the loan right of Guangzhou Urban Construction acquisition target holding company.

Point of view real estate new media learned that the Shuixi project is located on the southwest side of the intersection of the North second Ring Highway and Guanghui Expressway in the Science City, Huangpu District, Guangzhou. The project is located above the water northwest station of the second phase of Metro Line 7. Construction will begin in June 2020 and is expected to be put into use in 2023. It covers an area of 81600 square meters with a total floor area of 338800 square meters and a capacity construction area of 224500 square meters. Residential buildings and supporting public facilities can be developed.

Zhenlong project is located at the junction of Zhenlong Town and Zengcheng District Zhongxin Town, Huangpu District, Guangzhou City, covering an area of 242200 square meters, a total construction area of 703400 square meters and a capacity construction area of 508600 square meters, which can develop residential buildings and supporting public facilities. Construction of the project began in June 2020.

In order to realize the transfer of the equity of the target holding company and the loan right of the target holding company, on September 1, 2020, the buyer and Guangzhou Urban Construction have entered into a transaction document with, among other things, Quanjia Co., Ltd. (a brother company of Yuexiu Real Estate) and Guangzhou Yuexiu Group Co., Ltd. (hereinafter referred to as: Guangzhou Yuexiu).

Accordingly, the buyer conditionally agreed to acquire all the shares of each target holding company (51% of the target company respectively) for a total consideration of about 68.37 million yuan, and Guangzhou Urban Construction conditionally agreed to acquire the loan rights of the target holding company with an expected total principal of about 5.15 billion yuan, and transfer or refinance the relevant target holding company loans (including accrued interest) on an equal basis in each case after the completion of the acquisition.

Among them, the loan right includes three contents. First, the Shuixi target holding company and Zhenlong target holding company owe Guangzhou Yuexiu about 1.67 billion yuan and 1.83 billion yuan respectively. From each date (including that day) on which Guangzhou Yuexiu made or acquired loans from the relevant target holding companies, the interest will be calculated at an annual interest rate of 6.5%, and will be transferred to Guangzhou urban construction on an equal basis after the completion of the acquisition.

Second, Shuixi target holding company and Zhenlong target holding company owe Guangzhou Yuexiu about 375 million yuan and 1.09 billion yuan respectively, both of which are calculated at an annual interest rate of 6.5% from each date (including that day) of Guangzhou Yuexiu's loan to the relevant target holding company, and will be refinanced by Guangzhou urban construction when the acquisition is completed.

Third, Shuixi target holding company and Zhenlong target holding company owe (or expected to owe) about 57.3 million yuan and 122.7 million yuan in Guangzhou Yuexiu, which is consistent with the outstanding target special loans (including further target special loans expected to be lent). And interest is calculated at an annual interest rate of 6.5% from each date (including that day) on which Guangzhou Yuexiu made the loan to the relevant target holding company. Guangzhou urban construction will refinance upon completion of the acquisition.

Assuming that the acquisition has been completed on October 30, 2020, the total amount of acquisition payable by the buyer and Guangzhou Urban Construction is expected to be about 5.33 billion yuan, of which Shuixi acquisition is about 2.19 billion yuan and Zhenlong acquisition is about 3.14 billion yuan.

At the same time, after the completion of the acquisition, Shuixi Target holding Company and Zhenlong Target holding Company will become wholly owned subsidiaries of Yuexiu Real Estate.

In this regard, Yuexiu Real Estate said that after the completion of the acquisition, it will increase the group's land reserve of 1.05 million square meters in Guangzhou, and the total construction area of projects related to the group's rail transit project will increase to about 4.19 million square meters. it accounts for about 17.7% of the group's total land reserve at the end of June 2020, and about 32.9% in the Dawan area.

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