Meet the Vincent
IT'S A GRAY WINTER DAY IN SHANGHAI, and China's Donald Trump sits quietly in a finely furnished clubhouse in his signature development, Xintiandi. Comparisons with the famous American developer and would-be TV star make him shudder. "I am not trying to create a Vincent Lo brand," he says, wincing. "I am not so vain as that."
Yet many see 58-year-old Vincent Lo Hong-shui, the chairman of Shui On Group, as not stopping far short of Trump-like ambition in his bid to become China's best-known builder. Unlike the low-profile tycoons like K.S. Li of Cheung Kong, or the Kwok brothers of Sun Hung Kai Properties, he isn't afraid to host his own television show modeled on, yes, The Apprentice. And, just like the Donald, he's squired dozens of beautiful women, although whether any were named Ivana, Marla or Melania isn't public knowledge.
STILL, YOU WON'T CATCH LO CALLING Shanghai's mayor a "moron," as Trump famously labeled New York City's former leader, Ed Koch. Nor will you catch Shanghai's mayor retorting, "piggy, piggy, piggy," to Lo, as Koch did in response to Trump's insult. After all, Shanghai's mayor, Han Zheng, was once secretary of the Communist Youth League. His friendship with Lo goes back to 1984, when Shui On and the league built a hotel together. Not for nothing did the Economist dub Lo "the king of guanxi," the Chinese word for "connections."
These days, Lo can't escape the comparison to Trump. Last year, he won a $1 billion lawsuit waged by the Donald over waterfront property in New York that the two and some other investors had owned for years. Lo's group then proceeded to buy the landmark Bank of America Center in San Francisco -- precisely the kind of grand move that makes Trump hyperventilate, even though Trump remains a member of the investment group.
Barron's caught up with the Vincent in Xintiandi, a warren of alleyways between stone gates and 19th-century conjoined buildings -- the prevailing architecture until Chairman Mao's army captured Shanghai -- that today house some of Shanghai's trendiest hotels and shops.
At the city's heart is an unprepossessing building that famously hosted the first meeting of China's Communist Party Congress. Today, the complex is one of Shanghai's most popular attractions. Name any world leader or corporate chieftain who's visited Shanghai, and the odds are that he's dined at Xintiandi.
Xintiandi means "new heaven and earth," but its ethos is strictly commercial. Like Boston's Faneuil Hall or New York's South Street Seaport, its historical pedigree is mostly a lure for stores, restaurants and shoppers. Eventually, Shui On Land (known as SOL) expects to invest more than $9 billion on the mainland.
The developer, shown in front of his Xintiandi project in Shanghai, protests that "I am not trying to create a Vincent Lo brand. I am not so vain as that."
IN PERSON, THE WELL-COIFFED, WELL-TAILORED LO cuts a more dashing figure than Trump. For one thing, his hair is unadorned by strange weaves. He's courteous and engaging, but mum about financial details, owing to the coming initial public offering of Shui On Land, of which publicly traded Shui On Construction & Materials owns 20.7%.
The past year was a tough one for Shui On Land.
It had to delay sales of its properties in Shanghai as the government initiated tough measures to chill speculation, most of it aimed at the Shanghai property market. It introduced a 5.5% capital-gains tax, removed mortgage subsidies and forced people to pay higher subsidies. After leaping 15% early in the year, prices swooned, ending 2005 about flat.
Meanwhile, relocation costs were jumping for people who had lived for years, even decades, on the sites to be demolished and rebuilt. "They're squatters, but the government is really protecting them, allowing them to stay as long as possible and demanding exorbitant prices," complains Lo. Those investing in publicly traded developers suffered, too.
But by summer's end, China was reporting that bank lending was healthier than people believed, suggesting that property buyers had access to capital. Guangzhou R&F Properties, whose initial public offering had been upstaged by Baidu.com's stellar debut, subsequently soared. And stocks took off. China posted blistering growth. By December, signs of recovery had emerged at last.
Lo finally released the apartments in his Lakeville Regency complex -- the residential part of the vast, once-shabby Taipingqiao area whose centerpiece is Xintiandi -- for sale. Observers said that asking prices had scarcely budged from the boom times. Lo doesn't disagree. Pressed, he'll admit that Xintiandi itself loses money. But, he maintains, Lakeville is a money-spinner.
Thanks to Xintiandi's success, the Lakeville penthouses now fetch $10,000 per square meter, compared with $2,300 just two years ago. And there's plenty of juice left. "Xintiandi loses money. But Lakeview makes money. The internal rate of return on Lakeview is well over 20%!" boasts Lo.
NOW, THE CHINESE DEVELOPER IS VENTURING far into his nation's interior, as Beijing moves to upgrade its older, poorer cities. Xintiandi's success owes squarely to its mix of old and new; Hong Kong and other Asian cities are famous for tearing down their old buildings.
"When we started in 1988, most people didn't realize what we were trying to do -- adapt and reuse," says Albert Chan, Lo's master planner. Xintiandi taught Chinese to learn to like eating outside, and to like historic districts, says Lo. It's a potent mix in cities straining to join the first world.
Traditional Chinese architecture, set amid a warren of alleyways, marks Lo's Xintiandi project in Shanghai.
Shui On Land is building similar developments in Chongqing, China's wartime capital and its largest city, with 31 million people, in Wuhan and in Hangzhou. It has a landbank of more than 86 million square feet. Says Franklin Heng, an early investor in SOL and today the CEO of Macquarie Pacific Star Prime REIT Management in Singapore: "He has space all over China and has yet to develop most of it. If you believe the China story, this is a good investment."
It was also a rough year for Shui On Construction & Materials, Lo's only publicly traded vehicle. For the current year, JPMorgan thinks sales will fall 13%, to HK$1.95 billion (Hong Kong dollars) and that earnings will drop 33%, to HK$1.20 a share. Socam, as it's known, got into cement manufacturing in China in 1995. But its margins have been squeezed in the past couple of years. "Nobody thought it would be so difficult," says Cheng Hye Cheah, the chief investment officer of Value Partners in Hong Kong, which owns nearly 6% of Socam, as well as convertible bonds in Shui On Land.
Last year, Socam decided to merge its operations with Lafarge of France to create the biggest cement supplier in southwest China. It will have annual revenue of about 100 million euros and capacity of 17.4 million tons of cement. Lo figures that it will have produced 21 million tons of cement by the end of this year.
"China is so fragmented, it's crying out for consolidation!" Lo exclaims. "Cement is a scale business." Eventually, he sees Shui On Land's projects using Socam's cement. And even as SOL prepares for a listing, Socam is investing in distressed properties, alongside the J.P. Morgan unit of JPMorgan Chase (JPM). "I don't think there are as many distressed assets or abandoned projects anywhere else as there are in China," he says.
You'd never know that Socam was struggling from its shares, which have jumped 68% over the past 12 months. At its recent price of HK$16.85 (U.S.$2.16), the company boasted a stock-market value of HK$4.6 billion. That's more than the HK$15 a share that J.P. Morgan estimates as the company's underlying net asset value.
Why is the valuation so elevated? Credit the coming initial public offering. Socam owns one-fifth of SOL, and Morgan analyst Douglas Sung figures the stake is worth about HK$10 a share. SOL officials have said they'll raise about $1 billion, taking 20% to 25% of the company public in the first half. They need the cash to fund development of Chongqing and Wuhan, which could cost up to $2.5 billion in coming years.
Socam's surge and a successful listing for Shui On Land would be a triumph for Lo, who took SOL's two listed arms private in the late 'Eighties as their shares traded below their net asset values. Even as soldiers opened fire on students in Tiananmen Square, Lo loudly proclaimed Hong Kong to be yesterday's story, and the Yangtze River Basin to be the future. That played well with people in Shanghai, who welcomed him as a signal that China's reform policies were working at last.
"He saw the wind early, and went to China when the bulk of the Hong Kong establishment was still skeptical, and the Chinese government was in need of a lot of reassurance," says Cheng Hye Cheah of Value Partners, a longtime investor. "Had he not done what he did and remained in Hong Kong, he might have remained a third-tier businessman today."
Nobody knows the pricing of the Shui On Land shares yet.
REAL-ESTATE STOCKS HAVE BEEN STRONG in China, but some fear that an SOL offering "could mark a short-term top to the market," says Shu Yin Lee, who manages Dalton Greater China Fund as well as a real-estate partnership that's the single biggest owner of units in Lakeville. But Lee believes that Lo's reputation and his relationships with local officials are so good that the new shares ought to trade at a premium to those of some existing real-estate outfits.
In the past, Lo has told investors that Shui On Land would have 1 billion renminbi ($124 million) in annual earnings when he went public. It probably didn't achieve that goal in 2005, given that SOL only began selling its Lakeville Regency properties in December.
Observers say the properties are selling well, although not spectacularly so. "Lakeville is the cream of the luxury market, but for the first time in the last five years, people have realized they can actually lose money," says Michael Hart of Jones Lang LaSalle in Shanghai.
Stung by such statements, Lo repeats his promise: "We will perform better than one billion renminbi before our listing, for sure." And while the interior means poorer returns, that won't be the case for long, he says defiantly. "Cities like Wuhan and Chongqing at today's prices aren't so lucrative. But with the demand for quality space, prices will have to move."
"I'm very bullish" on Chinese real-estate, says Lo. "Everybody wants to buy their own flat. You're coming from a zero base. All these cities are becoming more affluent. I'm helping locations to grow. I don't think there are two developers that are doing what we're doing."
Close your eyes and you just might think of another very confident, very famous master builder was speaking.
对话罗康瑞
在上海一个灰蒙蒙的冬日里，中国的唐纳德?特朗普(Donald Trump)、现年58岁的罗康瑞(Vincent Lo Hong-Shui)静静地坐在自己开发的标志性建筑──新天地──装潢精致考究的会所里。当记者将他与那位著名的美国房地产大亨以及有望成为电视明星的特朗普相提并论时，他不以为然地耸了耸肩，“我可不想打造什么罗康瑞品牌……我没那么自负。”
但很多人都觉得，这位香港瑞安集团(Shui On Group)的主席在力图成为中国最知名的房地产开发商的过程中绝非没有特朗普式的野心。模仿美国全国广播公司(NBC)热播的、由特朗普一手策划并参与其中的真人秀《实习生》(The Apprentice)，罗康瑞在中国大陆筹备推出了一档电视节目《创智赢家》，并时而在节目中露脸。这与长江实业(Cheung Kong)的李嘉诚(K.S. Li)以及新鸿基地产(Sun Hung Kai Properties)的郭氏兄弟等人的低调截然不同。而且和特朗普一样，罗康瑞的身边也常常有许多美女，至于这些美女是不是也叫Ivana、Marla或Melania，我们就不得而知了。
不过，像特朗普那样谑称前纽约市市长Ed Koch为白痴，Koch又反唇相讥其为小猪的状况，似乎不太可能在罗康瑞和上海市市长韩正之间发生。韩正曾担任共青团上海市委书记，他和罗康瑞的交情可追溯至1984年瑞安集团和共青团合资兴建一间酒店的时候。《经济学家》(Economist)杂志称罗康瑞为“关系大王”，并非空穴来风。
如今，罗康瑞更是难免被外界拿来与特朗普相比。去年，罗康瑞打赢了由特朗普提起的一宗涉及双方以及其他投资者多年来拥有的纽约某水景物业的10亿美元诉讼。接下来，以罗康瑞为首的一个投资财团又在旧金山购买了标志性的美国银行中心(Bank of America Center)，虽然特朗普也是这个投资财团的成员，还是仍不住要为这样的大手笔倒吸了一口冷气。
《巴伦周刊》对罗康瑞的采访是在新天地进行的。这片在上海解放前随处可见的石库门风格的建筑群中如今已变成一处遍布时尚酒店和店铺的繁华之所在。
新天地位于上海城市的中心区域，它的旁边有一栋不那么惹人注目的建筑，那里就是著名的中国共产党第一次代表大会会址。如今，新天地已成为上海最热门的去处之一。随便哪个国家领导或公司高管到访上海，十有八九都会在新天地就餐。
新天地的意思是“崭新的天与地”，但气质完全是商业化的。就像波士顿的Faneuil Hall或纽约的South Street Seaport，它的怀旧风格主要还是为了吸引商家和餐厅进驻，以及吸引人气。新天地的开发商、瑞安集团(Shui On Group)旗下专注发展大陆市场的地产旗舰公司──瑞安房地产发展有限公司(Shui On Land Ltd.)计划逐步在大陆投资90多亿美元。
从个人形像来说，罗康瑞要比特朗普更富有锐气。比如说，他就从没梳过奇怪的发型。罗康瑞温文尔雅，只是对财务细节三缄其口，因为瑞安房地产即将进行首次公开募股。上市公司瑞安建业有限公司(Shui On Construction & Materials)在瑞安房地产中持股20.7%。
过去一年对于瑞安房地产来说是困难的一年。它不得不推迟了上海一些房地产项目的发售，因为中国政府制定了一些抑制投机的政策，上海房地产市场首当其冲。这些政策包括征收5.5%的资本增值税，上调个人住房贷款优惠利率，提高个人住房贷款最低首付比例等。上海房地产价格在2005年年初上涨15%后出现回落，至年底时市场价格与上年同期基本持平。
与此同时，拆迁成本大幅上升。罗康瑞抱怨说，开发商取得土地使用权后，拆迁户实际上属于擅自占住，但政府对拆迁户是持保护态度，默许他们尽可能地住下去，漫天要价。房地产类股的投资者也受到了损失。
但到了去年夏末，中国声称银行贷款业务的状况要比人们设想的健康，这说明买房子的人还是能获得贷款。广州富力地产(Guangzhou R&f Properties)在香港上市的股票随后上扬；该股出色的IPO表现曾因百度(Baidu.com)同期亮丽的上市而被许多投资者所忽视。股市上扬，加上中国经济的快速增长，到了当年12月份，房地产市场的复苏迹象终于显现。
罗康瑞的翠湖天地御苑(Lakeville Regency)的公寓部分也终于开盘了。在这片曾经棚户林立的太平桥区域，罗康瑞不仅打造了标志性的新天地项目，也规划了住宅项目，翠湖天地御苑就是其中之一。观察人士称，翠湖天地御苑的标价较楼市鼎盛时期基本未动。对此罗康瑞并不表示异议。如果被追问时，他或许会承认新天地本身是亏钱的。但他承认翠湖天地御苑是赚钱的项目。
由于新天地的成功，翠湖天地御苑的公寓房如今每平米售价10,000美元，而两年前为2,300美元。利润依然惊人。罗康瑞称，“新天地是亏钱的，但翠湖天地御苑是赚钱的。翠湖天地御苑的内部回报率大大超出20%！”
如今在中国计划将一些历史悠久、经济现状较差的内陆城市旧貌还新颜的时候，罗康瑞开始向中国大陆腹地进军。新天地的成功源于其新旧融合的风格，但香港和许多亚洲城市都在拆旧方面毫不手软。
“我们1988年开始做的时候，大多数人都不知道我们要干什么，我们要做的就是顺应原有的风格和再利用，”瑞安集团负责企划和开发的总经理陈建邦(Albert Chan)表示。罗康瑞称，新天地让中国人开始喜欢露天就餐和有历史感的地方。在上海这个力图迈入第一世界的城市中，新天地是一个让人回味无穷的、具有混合风格的地标。
瑞安房地产正在中国抗战时期的国都、如今拥有3,100万人口的最大城市重庆，以及武汉和杭州进行类似的项目开发。瑞安房地产的土地储备已超过了8,600万平方英尺。瑞安房地产的早期投资者、如今Macquarie Pacific Star Prime REIT Management驻新加坡的首席执行长Franklin Heng表示，“罗康瑞在全中国范围内都有土地储备，大部分都尚未开发。如果你相信中国经济定将崛起，投资它就没错。”
2005年对瑞安建业来说也不容易，瑞安建业是罗康瑞唯一的上市公司。JP摩根(JPMorgan)预计本财年瑞安建业的销售额将下跌13%至19.5亿港元，利润将下降33%至每股1.20港元。瑞安建业1995年进入了大陆水泥制造业。但近年来，其利润率不断被压缩。“没人料到会这么难，”Value Partners驻香港的首席投资长Cheng Hye Cheah表示。Value Partners持有瑞安建业近6%的股份，以及瑞安房地产的可转换债券。
去年，瑞安建业决定与法国拉法基(Lafarge)的业务合并，成为中国西南地区最大的水泥供应商。合并后，瑞安建业的年收入将达到1亿欧元左右，水泥产能达到1,740万吨。罗康瑞估计到今年年底水泥产量将达到2,100万吨。
“中国的市场非常分散，急需整合！”罗康瑞疾呼，“水泥业务的规模效应很强。”他希望将来瑞安房地产开发的项目将采用瑞安建业的水泥。虽然瑞安房地产准备上市，瑞安建业仍在和摩根大通(JPMorgan Chase, JPM)的JP摩根子公司一起投资一些烂尾楼项目。罗康瑞称，世界上可能没有一个地方的烂尾楼项目之多能超过中国大陆。
过去12个月，瑞安建业的股价大涨了68%。以最近16.85港元（2.16美元）的价格计算，瑞安建业的市值达到了46亿港元。这超过了JP摩根对其每股净资产价值15港元的估计值。
为什么瑞安建业的股票估价得到了提升？原因就是即将到来的IPO。瑞安建业拥有瑞安房地产1/5的股份，摩根分析师Douglas Sung估计这笔股份每股价值10港元左右。瑞安房地产的管理人士称，他们计划筹集10亿美元资金，上半年将公司20%-25%的股份上市。他们需要这笔资金为重庆和武汉的开发项目融资，预计未来一些年这些项目需耗资25亿美元。
瑞安建业股价的大幅上扬以及瑞安房地产如果成功上市，将是罗康瑞的一大胜利：罗康瑞在80年代末将瑞安房地产的两个上市子公司收归私有，当时它们的股价跌至了净资产价值之下。即使是在六四事件发生后，罗康瑞还是大声宣称香港已成为明日黄花，长江三角洲才是未来的主角。这甚合上海之心，他们欢迎罗康瑞，认为这反映了中国的改革政策终于见效了。
长期投资者Value Partners的Cheng Hye Cheah表示，罗康瑞很早就看清了趋势，在大多数香港人还在迟疑的时候就来到了中国大陆，而当时中国政府也需要很多外界的肯定。假如当年他没有这样做，留在了香港，今天他可能还是一个三流商人。
目前，人们还不清楚瑞安房地产的定价。
房地产类股在中国近年来走势强劲。但Dalton大中华基金的经理Shu Yin Lee表示，一些人担心瑞安房地产上市将使股市短期见顶。Lee管理的一个房地产合伙企业Grand River Properties是独家购入翠湖天地御苑公寓最多的一家。但Lee相信罗康瑞的声誉以及他与地方官员的良好关系将使得瑞安房地产的新股较现有房地产类股有溢价。
罗康瑞以前曾告诉投资者，瑞安房地产上市时年收益将达到人民币10亿元（1.24亿美元）。去年，瑞安房地产可能没有实现这个目标，因为它到12月份才开始出售翠湖天地御苑。
观察人士称，翠湖天地御苑的销售状况良好，虽然没有出现轰动。“翠湖天地御苑是豪宅中的豪宅。但5年来，人们首次意识到房地产开发也有可能亏损，”仲量联行(Jones Lang LaSalle)驻上海的Michael Hart表示。
受到此类说法刺激的罗康瑞重申了自己的承诺：“我们肯定能在上市前超过人民币10亿元的目标。”虽然投资内陆城市意味著较低的回报率，但罗康瑞坚信这种状况不会太久，“像武汉、重庆等城市，今天的房地产价格并没有很高的盈利空间。但对于品质住宅的需求必将推动房价上涨。”
“我对中国房地产市场非常看好，”罗康瑞表示，“每个人都想买下自己的公寓。一切都是从零开始。所有这些城市的富裕程度都在不断提高。我们的参与让这些城市的好地段不断增加。其他没有一家开发商在做我们所做的事情。”
闭上你的眼睛，你或许会以为这番话是出自另一个非常自信、非常著名的房地产大亨特朗普之口。
