Editor's Choice: Wealthy businessmen add colour to European property plays

What do a Norwegian nonagenarian, a poker-playing Frenchman of Vietnamese extraction and a former solider and politician from China have in common?

For starters, Norwegian billionaire Olav Thon, French-Vietnamese businessman and professional poker player Chuc Hoang and Chinese developer Wang Jianlin are extremely rich even if two of the trio come from modest backgrounds. Secondly, all three were important actors in European real estate in the past week. In fact, together this trio show that there is still room for colourful individuals with deep pockets in the European property arena, even if it is dominated primarily by straitlaced institutional investors and smart-suited private equity bargain hunters.

NORWEGIAN NONAGENARIAN
The biggest dealmaker of the three, looking purely at European acquisitions within the last two weeks, was 90-year-old (hence nonagenarian) Norwegian rags-to-riches billionaire Olav Thon. His Oslo-listed company - named simply Olav Thon Group - agreed on 6 June to acquire five shopping centres in Sweden from investor-developer Steen & Strøm for €360 mln, the third-largest property transaction in Sweden so far this year.

Olav Thon Group's 450-asset portfolio means it is already the largest individual commercial property owner in Norway. But the company - which has been focused on retail property since the 1990s - is now seeking to become one of the largest shopping centres landlords in neighbouring Sweden. This strategy fitted in with the need of Steen & Strøm, Klépierre’s Nordic subsidiary, to generate funds for its development programme. That plan is aimed at helping Steen & Strøm retain its crown as the number one mall owner-operator in the entire Nordic region.

At a first glance, nothing except for the investment volume makes this transaction particularly notable. But that changes after a closer look at the remarkable Olav Thon. Thon was born in the Hallingdal region of Norway in 1923. According to his authorised biography, he grew up as a 'farm boy who only went to the city to sell fox pelts'. Generally photographed wearing a trademark orange hat, Thon is a leading Norwegian real estate developer and the country's richest citizen. He was named in the Forbes billionaire list as the 198th richest person in the world with a net worth of €4.7 bn in March 2013.

Thon describes himself as a Christian and is married without children. In 2008, his solicitor announced he intends to give away his entire fortune via an independent foundation focused on medical sciences. Hats off to Mr Thon!

EIFFEL TOWER POKER
The second figure to fall under PropertyEU's gaze this week is property developer, investor and professional poker player Chuc Hoang who has been involved in a gruelling management spat for control of French REIT Société de la Tour Eiffel. This week Hoang failed in a Parisian appeal court in his latest attempt to block a rival bid by French mutual insurance group SMABTP for control of the €700 mln Paris office owner.

French of Vietnamese extraction Hoang was ranked by a 2013 wealth list as the 176th richest person in France with a fortune, held along with Nicolas Huang, estimated at €290 mln. Most references to Chuc Hoang on the internet relate to his exploits - sometimes successful - in professional poker tournaments.

Hoang, who holds a 30% stake in STE, and his companies, MI29, Eurobail and Foncière Wilson, have been extremely critical of STE's management, alleging last year that the managers were guilty of abuse of power and misuse of corporate assets.

Under Hoang's plan, STE would keep its REIT status, which would bind him to a holding of no more than 60% and he would adjust the company's strategy and extend debt maturities before resuming property acquisitions to rebalance its portfolio. SMABTP plans to double the portfolio within the next three to five years while providing liquidity to reduce its loan-to-value ratios. It will withdraw its bid if it does not get a minimum of a 40% stake.

CHINESE GIANT
Our trio is completed by Wang Jianlin who has served as chairman of Chinese commercial property and hotel colossus Dalian Wanda since 1989, a year after the four-industry conglomerate was founded.

That the Chinese are coming into European real estate has been a mantra fors ome time now, but Dalian Wanda has been very much the public face at the spearhead of the charge. On 6 June PropertyEU revealed that Dalian Wanda had touched down in 'mainland Europe' with the acquisition of Madrid's highest towers from lender Banco Santander for around €265 mln.

That move followed an announcement in November last year that the Chinese company plans to invest £700 mln in the acquisition and redevelopment of the One Nine Elms mixed-use site in London's South Bank regeneration area. And according to media reports Jianlin is planning to visit Moscow this summer to consider real estate investment opportunities. His Dalian Wanda Group, the world's largest cinema chain, is believed to be interested in building entertainment centres and hotels in the Russian capital. Last week it was reported Wang Jianlin had already been party to the signing of a letter of intent which would see Dalian Wanda invest up to $3 bn to develop resorts in Russia.

Jianlin was listed in 2013 as the 128th richest man in the world with $8.6 bn (Forbes) and as the richest man in China with a fortune of $14.2 bn (Bloomberg). The company he manages - Dalian Wanda – is even more sizeable with assets of $62 bn (€46 bn). This is just slightly less than the AUM figure for the world’s largest mall developer and operator Westfield ($68 bn).

A look at his early years, however, suggests that Wang Jianlin may have trod a different path in life to reach the position of wealthy business than most others in a similar position. Jianlin was born in Cangxi County, in China's Sichuan Province in 1954. His father had served with Mao Zedong in the mid-1930s on the infamous Long March which the communists undertook to evade their nationalist foes. Wang Jianlin also entered the People's Liberation Army in 1970 in the latter part of the turbulent Cultural Revolution and served until 1986. He was then appointed Office Director of the Xigang District Government in Dalian and served as a deputy to the 17th National Congress of the Communist Party of China. Jianlin became chairman of Dalian Wanda in 1989 and currently serves on various business and charitable committees in addition to his management position at the helm of one of China’s most dynamic enterprises.

Like Thon and Huang, Jianlin has already come a long way. His interest in the Spanish and Russian markets suggest we may well see a lot more from him on the European property stage in the not too distant future.

Cormac Mac Ruairi
Senior Editor PropertyEU

Related articles on:
Olav Thon
Chuc Hoang/STE
Wang Jianlin/Dalian Wanda