Dalian Wanda has expanded services to include cinema and light-asset operation. It plans to build 1,000 Wanda Plazas in the future. (Photo : www.english.caixin.com)
Dalian Wanda Group has shifted its focus to an asset-light operation, following the recent partnership with China Vanke, a developer of residential projects, and the plan to set up its financial unit in Shanghai, the Economic Observer reported.
According to the report, Wanda plans to set up its financial arm in Shanghai in 2017 and has been talking with the Shanghai Free Trade Zone to set up a real estate investment trusts (REITs) platform.
The company is also negotiating distribution with brokerages, as the planned REIT products will be linked to Wanda Plaza shopping centers.
But despite this, Wanda's trading platform is still awaiting approval, while Vanke's application to launch a REIT fund for real estate has already been approved by the China Securities Regulatory Commission, which it plans to set up in the newly established free trade zone in Qianhai, Guangdong.
An executive of Wanda said that the shift to asset-light operation and REIT products is part of the challenge that the company must face as it expands into the investment and financial management. The executive added that the need to evaluate its management came with that challenges that includes the difficulty in acquiring a banking license, the flotation of shares and the volatility of the property market.
The report said that the REIT-like products will enable Wanda to raise the funds needed for its plan to construct 1,000 Wanda Plazas in the next decade, as it expects banks to tighten credit offered to property projects.
Currently, 70 percent of the Wanda's funds were borrowed from banks and it will cost the company 800 billion yuan ($129 billion) to build its 1,000 planned shopping centers.
Securitization of the company's business, proper branding and design will help lure capital into the company and help the company's transformation, said an executive at Wanda Commercial Property.
