Beijing Vantone Industrial has signed a framework agreement with the country's leading appliance and television maker TCL Corp to explore the industrial property sector in a joint venture.
The partnership, named Vantone Innovation Industrial Resource Investment, is specialized in the investment of the industrial property sector and business parks. With a registered capital of 250 million yuan ($37 million), Vantone has a stake of 55 percent in the company and TCL takes the remaining 45 percent.
"We will bring in other investors as the company grows and plan to list it around 2013, probably in the form of real estate investment trusts (REITs)," TCL's chairman Li Dongsheng said at the press conference in Wuxi over the weekend.
China's REITs plan is now in the last lap of approval from the State Council, after getting the green light from the concerned ministries, sources familiar with the matter told China Daily earlier.
Yang Haishan, REIT BD manager of Harvest Fund Management, said he was quite interested in such a REIT as the cooperation will reduce risks.
According to Li, the cooperation with Vantone will reduce TCL's investment into fixed assets and improve its capital use efficiency. It also marks the country's first trial between a property developer and a manufacturer in tapping the industrial real estate business.
Currently, TCL has nine business parks over the country, with floor space totaling around one million square meters.
"We will put those assets into Vantone Innovation step by step," Li said.
In 2009, the company completed the acquisition of TCL's Wuxi Digital project and reconstructed it within six months, increasing the project's rental rate to 90 percent, from 55 percent in July 2009.
For Feng Lun, chairman of Beijing Vantone Industrial, the deal with TCL is just the beginning of its efforts in exploring the industrial property sector.
"We aimed to make Vantone Innovation an leader in the industrial real estate sector within five to 10 years. The cooperation with TCL is a long-term plan instead of a short-term speculation," Feng said.
Given the government's tightened real estate policies, Vantone Industrial's move is also regarded as an effort to separate risks from the traditional residential sector. Vantone Real Estate is a listed company in Shanghai, focusing on the residential sector.
