Chapter 260: Spin off the Real Estate Business
The next day came a new dream.
"Mr. Xu, are you looking for me?"
Xu Liang waved, "Old Teng, come and sit."
As he said that, he put down the documents in his hands and looked at Teng Huaming sat down.
"The company has developed well in the third quarter."
New Dream's net revenue in June, including Ideal Education, was only about 30 million Huaxia dollars, but by June, it suddenly rose to 50 million , it rose to 70 million in July, exceeded 83 million in August, dropped to 55 million in September, and became 35 million in October.
“Thanks to the summer vacation, the number of students enrolling in cram schools and art training classes is several times more than usual. Otherwise, our revenue would not be so high.” Teng Huaming said.
Winter and summer vacations are the peak periods for class registration.
Last year, the new dream of only doing high school art training was not obvious. But this year, the new dream of entering into kindergarten art education and middle and high school subject education, I felt for the first time that winter and summer vacations are so delicious.
Income can be doubled instantly.
Xu Liang nodded slightly and asked, "How many branches does Ideal Education have in Shanghai now?"
"17, and it can be expanded to about 25 by the end of the year."
"What about Pengcheng?"
"14. There are 13 in Yangcheng. Counting Beijing, there are a total of 67 ideal education schools in the country."
Ideal Education and New Dream Art Education share the same building. Basically, there are as many New Dream kindergarten art training institutions as there are branches of Ideal Education.
"You can discuss with the owners of the commercial buildings we are leasing now and buy the properties." Xu Liang said.
Teng Huaming frowned slightly, "Mr. Xu, we currently lease more than 480,000 square meters of commercial real estate. Although most of them are old commercial buildings or office buildings from the 1990s, one square meter ranges from 5,000 to 7,000 square meters. Thousands.
To buy them all would require at least five billion Chinese coins. We don’t have that much money.”
Xu Liang thought about it and said, “How much money does the company have on its account now? ?”
"140 million Chinese coins." Teng Huaming said immediately.
As the CEO of New Dream, he is too familiar with New Dream’s finances.
Xu Liang nodded slightly, feeling a little lucky in his heart.
If New Dream hadn’t been one of the “Top Ten Innovative Enterprises” in the capital city and the corporate income tax was halved, they wouldn’t have been able to save so much money.
"Mr. Xu, the Chaoyang District Government has agreed to help us find a piece of land to build a new headquarters. We are currently selecting a site. If everything goes well, construction will probably start next year. If we use the money in our account to buy it at this time, If we don’t build a building, we will have no money to build a new headquarters.”
After the failure to purchase Area 798A, the construction of a new headquarters was put on the agenda. This was something Xu Liang knew.
Xu Liang nodded, after thinking for a moment.
“Lao Teng, I plan to spin off the real estate business of New Dream.”
“Mr. The company's financial pressure is too great," Teng Huaming explained quickly.
“I know this, but the new dream should be purer.”
Saying that, Xu Liang made up his mind.
The real estate business requires large capital investment, so he has prepared a huge investment of US$500 million.
But through the conversation with Teng Huaming, he suddenly discovered one thing. It is difficult for a company that mainly focuses on education to enter real estate.
According to his idea, after buying all the commercial real estate for US$500 million, he would immediately obtain a mortgage loan from the bank, and then continue to purchase and repeat the mortgage.
On the eve of the take-off of China's real estate industry, this can quickly amplify his net income.
But Teng Hua obviously disagreed with his idea.
Think the risk is too high.
His idea is correct. For a company with normal development like New Dream, Xu Liang's approach of treating real estate as a financial operation is indeed too risky.
But if you don’t do this, the return of investing US$500 million in real estate will be too low, and it is better to invest in the stock market.
This is the contradiction between the two sides.
Although Xu Liang knew that if he forced it, Teng Huaming would comply, but it would definitely create a gap.
Teng Huaming is an excellent CEO, and New Dream has maintained a monthly growth of more than 10% in his hands, so he does not want to cause the two to be separated because of this incident.
In this case, simply divest Xin Meng’s real estate business and turn it into a purely asset-light education company.
Seeing that he had made up his mind, Teng Huaming said nothing more.
He is really not optimistic about New Dream’s entry into real estate. It consumes too much money. The interest of nearly 3 million per month and the 500 million fund due in five years are a huge burden for New Dream. .
If you get rid of this burden, your new dream can develop faster.
"Mr. Xu, if all New Dream Real Estate business is divested, then the financing conditions of Ideal Education will also have to be completely revised." Teng Huaming reminded.
According to the strategy previously set by the two, New Dream’s Series A financing was launched in October, with the fund-raising targets being IDG and Yingke.
Teng Huaming is solely responsible for this financing negotiation.
According to the agreement reached by the two parties, based on the equalization of Ideal Education’s revenue and net profit in the first nine months, taking into account conditions such as development speed and industry status, the valuation is 1.5 billion Chinese dollars.
IDG and Yingke obtained 8% and 7% of the equity respectively.
Now that there is no drag from the real estate business, the valuation is definitely more than 1.5 billion Chinese dollars.
"Let's talk about it more."
Teng Huaming nodded.
After personally experiencing Hongmeng’s valuation of US$2.8 billion and financing of US$560 million, he no longer has much interest in the financing of Ideal Education.
Leave it all to Teng Huaming.
He only cares about the final result.
After making the decision, Xu Liang quickly made adjustments to the business of Hongyan Fund.
Name the self-operated equity investment business ‘Hongyan No. 1 Equity Investment Fund’.
Responsible for investments in Apple, Amazon, and NetEase.
Then the second self-operated Hongyan No. 2 Real Estate Investment Fund was established to specialize in real estate investment.
At the same time, New Dream’s debt of 520 million Chinese dollars and 19 commercial buildings with a total area of 152,000 square meters were transferred to Hongyan No. 2 Real Estate Investment Fund.
——
Lu Jue came to the ninth floor of Fukai Building with anticipation.
He has received the news that New Dream has transferred all its real estate business to the Big Boss’s investment fund ‘Hongyan’.
As the director of the New Dream Real Estate Investment Department, if the company does not make new arrangements, he will be dismissed.
Of course, there may be other appointments. The uncertain future made him very anxious during this period.
After getting out of the elevator, I saw the logo of Hongyan Fund and the standard italics on the opposite wall. After taking a deep breath, I pushed open the pop-up door and walked in.
The front desk is facing you.
The young lady wearing a women's suit with small lapels had a standard professional smile on her face.
"Hello, sir, do you have an appointment?"
"I am Lu Jue, director of the real estate investment department of New Dream Company. Mr. Xu Liangxu asked me to come here to meet him."
The front desk, who had been handed over by Lu Hui a long time ago, turned around and walked out of the counter.
"Director Lu, please come with me."
Lu Jue nodded and quickly followed.
After the lady at the front desk swiped her card and opened the passage to the interior, Lu Jue followed her in.
Soon there was an independent office space of about 300 square meters.
There are about fifty or sixty people working inside, and the space is very generous.
After passing through this office space, there are some independent offices and reception rooms.
Soon the receptionist led him to an office surrounded by tempered glass.
"Director Lu, Director Lu Jue from New Dream Company is here."
Lu Hui, who was working, got up and walked over.
She had met Lu Jue and came over with a smile.
“Thank you for your hard work, Xiao Zhang.”
"You're welcome. It's okay. I'll leave first."
"Yes."
After the front desk left.
"Director Lu, Mr. Xu is in the office. Come with me."
"Okay."
Xu Liang's office was next to the secretary's office, and Lu Hui knocked on the door.
“Come in.”
Push the door and go in.
"Mr. Xu, New Dream Director Lu Juelu is here."
"Let him come in."
Lu Hui turned sideways and let Lu Jue walk in.
"Mr. Xu."
Xu Liang walked to the reception area next to him with the documents in his hand.
“Sit.”
After he sat down, Lu Hui brought him a glass of water.
"Thank you."
"You're welcome."
Xu Liang handed over the information in his hand.
“You take a look first.”
Lu Jue picked up the documents on the table and read them carefully.
There is a neat line of text on the first title page.
‘Hongyan No. 2 Real Estate Investment Fund’ plan.
When I turned to the second page and saw that the fund totaled US$500 million, my heart started beating loudly.
Qiangzi suppressed the excitement in his heart and carefully read the content at the back. After reading it all bit by bit, he put it down.
"Mr. Xu, this...?"
Thousands of words were stuck in my throat for a while, and I didn't know how to speak.
Xu Liang smiled and said: "I think you already know that New Dream's real estate business has been completely divested to Hongyan."
"Yes."
Lu Jue hurriedly He nodded and said expectantly: "Mr. Xu, you...are you going to let me be in charge of Hongyan Fund No. 2?"
"Yes. After all, the only ones I know about real estate investment here are you and you. Department.”
Although Lu Jue's ability is not top-notch in the real estate investment industry, it is better to use it raw than to use it familiar. Moreover, real estate investment at this stage does not require too advanced talents.
"Don't worry, I will definitely make Hongyan No. 2 Real Estate Investment Fund a success." Lu Jue assured quickly.
Xu Liang waved his hand to signal him to calm down.
"Don't be excited. Since I am giving this fund to you, I believe in your ability."
"Yes."
"As for the investment direction of Hongyan No. 2 Fund, it is still the same as when you were in New Dream. In line with the expansion of New Dream, it will mainly focus on old commercial properties of about 10,000 square meters."
Although it is old The real estate appreciation potential is not as good as the commercial real estate in the CBD core land, but the purchase price is also much cheaper.
More importantly, you can get a 100% rental rate.
No matter how well-built your building is, if you can’t rent it out, it’s all in vain.
“Yes.”
"We will focus on first-tier cities and will not enter second-tier cities for the time being." Xu Liang emphasized.
With limited funds, of course, properties in first-tier cities are more popular.
(End of this chapter)