• Made in China

Dalian Wanda Commercial Properties has filed for a listing in Hong Kong, with rumours suggesting it could raise up to USD6bn.

The company is planning to use the proceeds to expand in China, but is also looking overseas, joined by the likes of HNA, which confirmed its increased investment in NH Hotels.

Wanda Commercial’s assets include 48 hotels across China, out of 102 hotel projects in 83 cities, 92 of which are integrated into other developments. Of the group’s 48 hotels, 20 are operated by the group, under one of three luxury brands established in 2012, with the other 28 operated by global brands, including InterContinental Hotels Group, Starwood Hotels & Resorts, Hyatt Corporation, Accor and Hilton Worldwide.

In its prospectus, the company describes itself as the leading commercial property developer, owner and operator in China and second-largest commercial property owner in the world. In addition, it is the largest luxury hotel owner in China.

The company did not give any details on the size of the proposed float in the prospectus, with rumours putting it at anything between USD2bn and USD6bn, giving it the potential to be one of the biggest flotations in Hong Kong in recent years. The group had previously sought to list in Shanghai, but switched to Hong Kong after failing to get regulatory approval.

The company has expanded outside China to selected strategic cities, including London, Madrid and Los Angeles, in addition to entering into agreements for two potential developments in Chicago and Australia.  For the six months to June 30, the company’s hotel operations accounted for 7.6% of total revenue, with CHY1.78bn.

Dalian Wanda Commercial Properties said that it aimed to become the leading global property developer, owner and operator with an internationally-recognised brand name and reputation. As previously reported in Hotel Analyst, chairman Wang Jianlin used the announcement of the group’s Chicago property to outline his plan for the company’s future in the US, commenting: “Investing in Chicago property is just Wanda’s first move into the US real estate market. Within a year, Wanda will invest in more five-star hotel projects in major US cities like New York, Los Angeles and San Francisco. By 2020, Wanda will have Wanda branded five-star hotels in 12 to 15 major world cities and build an internationally influential Chinese luxury hotel brand.”

Wanda Group chose London for its first move outside China, with a GBP700m investment in a project in London announced last year. It will feature 160 rooms and 63,000 square metres of luxury apartments on the One Nine Elms site in Vauxhall in two towers, including the highest residential tower in Europe, at 205m.

At HNA, the company has increased its stake in NH Hotels, after buying some of bank Intesa Sanpaolo’s stake in the group. HNA said in the statement the move was not part of any shareholder pact with the Italian lender and that it had no intention of making a full takeover offer for the hotel group.

In May this year HNA Group offered to buy 30.56 million shares of NH from Intesa, for EUR139m The purchase would take HNA’s stake in NH to roughly 29.9%, just below the threshold where it would have to launch a takeover bid for the whole company.

Since then NH Hotels announced at its second quarter results that it had seen ongoing improvements in trading and was meeting strategic targets. ADR grew in the second quarter by 0.2% after two years of contraction, while comparable revenues rose by 2.4%.

The group’s efforts to cut costs around its leases continued, with 25 hotels exited in the first half of the year, keeping 13 within the group thanks, it said “to the agreements reached with the owners (better financial conditions or investment commitments)”. During the second half the group plans to exit six. 

The news came as Wanda announced that it had started construction of its first rollercoaster, at Xishuangbanna Theme Park in Yunnan Province. With its plans for global domination so far pressing ahead unhindered, there is no sign that it is at risk of crass analogies from journalists.

 

HA Perspective [by Chris Bown]: The scale and ambition of Dalian Wanda is impressive. It is expanding on several fronts, having bought into everything from luxury yacht makers to bowling alleys in Europe and the USA. A property team established in the UK is also looking at rental housing, as well as hotels.

If the group is going to spend money building hotels in the West, will those be to support the expansion of its own brands, or to provide real estate for the international hotel brands, which it already plays landlord to in its home market? In a bid to capture trade from the increasing wave of incoming Chinese visitors, it could well be the former.

Meanwhile in Spain, HNA is just starting to look at how it can exploit the expertise within its investment in NH. The pair have announced a joint venture management company to start running HNA’s hotels in China, ahead of a planned launch of an Asia oriented NH brand. Leveraging these connections could serve both partners well. And if a common brand is established in China, expect HNA to use its airline connections to grow a Spanish link for Chinese holidaymakers.

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