San Francisco 75 Howard Project completes a business transaction
On May 9, SRE Group’s San Francisco 75 Howard project completed
delivery, marking its first North American project. The first overseas project
acquisition got to an end in 2017.
High quality properties in San Francisco's core area
On February 20, 2017, SRE Group issued an external announcement that its subsidiary had signed the buy-sell agreement with the seller and SRE would soon have 80% beneficial interests in price of 88 million U.S. dollars for San Francisco 75 Howard project.
San Francisco 75 Howard Project, located at No 75, Howard Street, San Francisco, California, US, covers about 1860 sqm. It is currently a eight-storey car park. The San Francisco Planning Board approved the development of a hybrid residential retail and car park project on the property on September 3, 2015.
It is reported that this area is the CBD core area in San Francisco, surrounded by public transportation that includes subway, light rail, tram, bus and ferry, etc., The transport network is well developed. Next step, SRE Group will build seaward mansion and accelerate the development of the project. According to the current planning and design plan, the project is to be developed into a comprehensive property including advanced apartments, ancillary commercial, car parks and so on.
SRE’s experience in overseas expansion
Opening up overseas market, for Chinese enterprises, is not only full of opportunities, but also greater challenges. After more than a year of overseas development practice, the group has gradually explored a set of overseas project investment model with its own characteristics.
Encouraging strong point. In the process of overseas project development, SRE Group starts with its familiar field with great caution on cross-industry investment. The main business for SRE is its real estate business that it has experience in domestic for many years. By taking real estate business as a starting point for overseas business, SRE Group can integrate into overseas local market faster. Currently, five overseas projects that the group has actually landed are real estate projects.
Cooperation and mutual win. This includes two parts: firstly, SRE Group relies on shareholder resources. Secondly, SRE Group seeks local partners to achieve complementary advantages, cooperation and mutual win. China Minsheng Investment has a strong shareholder background and industrial resources. In the process of overseas expansion, many shareholders are willing to participate in the investment and development of the project and Minsheng investment assists in forging friendship to open up the market. At the same time, SRE Group is committed to finding excellent local partners to effectively promote the development of overseas projects. Projects like London Atelier Residential development, San Francisco 75 Howard House Development and Sydney St Leonards office building, etc. all belong to cooperative projects.
Knowing the score. The first task before entering the overseas market is to understand local markets, regulations, taxation, environmental protection, labor relations and other issues in-depth. SRE team not only actively and deeply studies local environment, but also ask local law firms, auditors, accounting firms and other third-party agencies to make the special adjustment.
Do in Rome as Rome does. SRE Group adheres to the "global localization" strategy and gradually establishes local and professional team in Europe, Australia, North America and "B&R" regions where the group implements investment development and asset management. At the same time, in the project development process, the group not only pays attention to economic benefits, but also focuses on promoting local economic and social development, through education, health care, commerce, science and technology and other industrial resources to provide employment opportunities for the local community and improve urban construction, living standards and local overall development.
The embryonic form of overseas layout
Since 2016, SRE Group has laid out 5 projects in Sydney, London, San Francisco and other cities. These projects can be divided into two categories: one is core assets project and the other is development project.
In the selection of core assets, SRE Group will usually choose projects that have obvious locational advantage, and the project building must have higher value and space to improve. Project like Societe Generale headquarters building is located in the City of London, adjacent to world-renowned attractions Tower of London. The lease is stabile enough to obtain fixed cash flow. In addition, according to the envisaged planning plan, after external renovation and internal transformation, the project has much space and value to lift.
As to development projects, SRE will generally choose projects located in urban mature region with scarce resources and supporting facilities. Project like London Atelier Residential development is located in London's traditional high-end area in west Kensington, which contains London's premier school-district resources. It has only 3 minutes from the Olympia subway station and 10 minutes walk from the famous Westfield shopping center. The project officially begins to sell on March 13, 2017. After two promotion meetings in Shanghai, the booking rate reached 63%. Another example is the just acquired San Francisco 75 Howard Project. It is located in San Francisco's CBD core area, facing San Francisco Bay with excellent landscape resources. The surrounding public transportation includes subway, light Rail, tram, bus and ferry, etc., the transportation network is well developed. According to the approved planning and design program, the project will be the leading luxury apartments in San Francisco.
In addition, the group is also lying out along “B&R”. In this region, the group believes that such areas are in the accelerated period of urbanization development. Drawing on China's development process, SRE could share development opportunities in such areas with China's capacity resources.