On 5 August 2016,”EBP-EBA IMIX Park Asset-backed Specific Plan” (the IMIX Park REITs) , an REIT asset securitization product, was successfully launched by Everbright Prestige Capital Asset Management Co., Ltd. (EBP Asset Management) with the advice of King & Wood Mallesons (KWM). With a principal of RMB 2.5 billion, the IMIX Park REIT is backed by the underlying asset of Guanyinqiao IMIX Park, the flagship IMIX shopping mall managed by EBA (Beijing) Real Estate Investments Consultancy Limited (EBA Investments), with its future rents and other revenues as the repayment sources. As one of the first quasiREITs involved private equity real estate in China, the IMIX Park REIT opens a new era of the "PE+REIT" strategic model in domestic commercial real estate.
Embodying the experience and research findings in REITs listed internationally and quasi-REITs listed domestically, the product adopts the dual SPV structure of”commercial real estate private equity + ABS”. EBP Asset Management acts as the manager of the first layer of SPV (asset-backed specific plan), and EBA(Beijing) Investment Management Limited the manager of the second layer of SPV (contractual private equity fund). Drawing on the conventional structure of domestic quasi-REITs, the IMIX Park REIT features a market-driven trading mechanism consisting of an innovative term structure of ”3 + 3 + 1” , a ranked voting shareholders’ general meeting system, and a follow-up evaluation system in the duration, which takes advantage of EBA Investments’s ability in commercial real estate fund management. The product is highly recognized by the Shenzhen Stock Exchange, the issuer and investors. The expected annual yield is 3.8% on Senior Tranche A and 4.3% on Senior Tranche B, the lowest rates among similar products.
As legal counsel on all aspects of the transaction, KWM played an important role in product design, filing of private equity fund managers, establishment of the asset-backed plan and the contractual private equity fund, and restructuring of the underlying asset. This was another innovative transaction following numerous domestic and foreign quasi-REITs and REITs on which KWM provided legal advice, including ”CITIC Huaxia Suning Yunchuang Asset-backed Specific Plan” (listed on SZSE),”Heng Tai Hao Rui-HNA Pudong Development Building Asset-backed Specific Plan” (listed on SSE),”Tianfeng-Catic Red Star Aegean Commercial Property Trust Beneficiary Asset-backed Specific Plan” (listed on SSE),”Yuexiu Real Estate Investment Trust” (listed on HKEx),”New Century Real Estate Investment Trust” (listed on HKEx),”EC World REIT” (listed on SGX). The KWM team was led by partners Yang Xiaolei, Fang Rong and Wen Jianli, supported by Xue Shengnan, Ye Shengjie and Li Quan. Partner Su Zheng also provided strong support.
Partner Yang Xiaolei said,”It’s our pleasure to provide legal services to EBP Asset Management and advise on another innovative real estate asset securitization product. We always stay at the forefront of the industry as pioneers and innovators. We have accumulated extensive experience by advising numerous clients on their securitization products, and our leading position in securitization and REITs is fully acknowledged by our clients and peers alike."
