A company based in Tianjin, a major metropolis to the south-west of Beijing and listed on the Nasdaq stock exchange, has entered into an agreement to buy a hotel in Scotland.
MDJM, described as an integrated real estate services company in China, said its UK subsidiary, MD Local Global Limited, had entered into an offer to with Braveheart Hotels Limited to buy Fernie Castle Hotel in the heart of Fife situated in 17 acres of woodlands.
The acquisition of the 20-key hotel castle is capturing attention particularly as MDJM said it intended to position the castle as the ‘headquarters for its business in iconic assets’.
It is a milestone deal of MDJM’s strategic implementation of business transformation and international expansion,’ it said.
Siping Xu, chairman and CEO explained: ‘We believe physical assets play an important role in preserving value against inflation and that, by the time we make considerable progress in the strategic layout of our new business in the European market, our international expansion may become a key growth point. We expect to have stronger execution for our upgraded strategic business plan, discovering and operating more assets with unique historical and cultural value in the future.’
Until this moment, few in European real estate circles had heard of MDJM. The company was founded in 2002 as Mingda Tianjin and appears to be primarily a company providing services to real estate developer clients such as offering primary agency sales services to residential developers. Operations in the UK began in August 2021 via MD UK Mansions Estate, again offering real estate services. In filings for H1 2021 released in October last year, the company said revenue was $2.71 mln (€2.73 mln), approximately the same as for the 6 months ending 30 June 2020.
Conditions in China had affected the company as it made a net loss. The acquisition price of Fernie Castle is thought to be around £1.5 mln (€1.78 mln), so the transaction is modest.
Hotel advisors, THPT, commented: ‘Great looking property….cautious starting point for the Chinese MDJM, which is probably a good idea…great price for them.’
Xu said: ‘The cooling down of new construction in the residential housing market in China had a negative impact on our operation results; however, we are glad to see our establishment of a new joint venture company in the United Kingdom in August 2021 for asset management business, which was a significant step for our global expansion strategy. Going forward, we expect the improved housing market in China will boost our revenue growth. Meanwhile, we will keep exploring viable strategic alternatives to strengthen our business.’
