• 1. What?is?BCL's?development?strategy?in?2015?

    Answer
    Following a business policy and strategy of “large-scale development with a focus on rapid turnover, destocking and restructuring”, BCL will continue to implement its five-year strategic plan by developing residential properties, “residence + outlet” complexes, and urban-centered complexes themed by “Focus and Innovation”, and expanding its land investment in the five major cities. Under its own strength and complemented by the infrastructure advantage of its parent company, BCL will target to secure core land resources such as those in Beijing CBDs.

    Project operation and development will be further accelerated by shortening the period between land acquisition and property launch on market to the industrial advanced level; major assets management will be standardized by building a strategic procurement system involving the headquarters, regional offices and field companies; the investment tracking mechanism will be fully functional; and marketing resources will be integrated to establish a compound marketing channel.

    We will continue to promote the outlet model nationwide, expand our overseas markets by increasing investment and cooperating with overseas firms, and steadily advance the building of a red chip platform to explore multichannel financing.

    We will provide more value-added services through Internet centering on the “Living Area” scheme under the brand of “Call It Home”. “O2O” mode will be introduced in marketing, property management, community service, and assets management to maximize our customer value.
  • 2. As?the?central?bank?has?lowered?the?prime?interest?rate,?will?BCL's?lending?rates?be?affected?

    Answer
    The lowered prime rate is beneficial to reducing financing costs, and there is some room for BCL to adjust its loan interest rates downwards. Currently BCL will control the financing costs within 7%. As a state-owned company, BCL has a good relationship with major banks and enjoys accessible financing channels, so its financing costs had already been rather low prior to the adjustment. Certainly, lower interest rates will have a positive effect on the whole industry.
  • 3. How?would?you?comment?on?the?development?of?real?estate?industry?last?year?and?in?2015??

    Answer
    China’s economy has shifted from high-speed growth to steady growth since 2014 with a 7.4% year-on-year GDP growth. Seeking a balanced economic growth, transformation and upgrading, China has set up a development direction for the new normal economy, which includes essential productive factors, consumption and investment, as well as resource allocation. It is expected that quality will be further improved, and economic structure optimized.

    As the overall economic growth had been slowing, the real estate industry also entered an adjustment period at the end of 2014. On one hand, there was a high property inventory level, and on the other a change had taken place in consumers’ attitude due to the transition of regulatory policies in real estate industry which included the withdrawal of purchasing and credit limit, and steady advance of long-term mechanisms such as household registration reform and new land circulation system. This combination of factors left the real estate industry going downward in the first half of 2014, but bottoming out in the fourth quarter and showing signs of revival.

    Looking into the future, real estate enterprises must explore in-depth customer value and seek innovative business models to enable a long-term development. Commodity housing sales in 2014 reached RMB 7.3 trillion, the second highest level in history. It is thus clear that this industry still enjoys broad room for further growth.
  • 4. How was BCL's financing position in 2014? What is its financing plan in the future?

    Answer
    BCL is pursuing large-scale, long-term and low-cost financing. In 2015, it will strive to achieve new breakthroughs in equity financing and alleviate debt pressure through equity funds and real estate investment trusts (REITS), while working to meet its long-term financial control goals: a debt to assets ratio at 70%, and a net gearing ratio at 80%. BCL's financing position in 2014 was as follows:

    1) A mid-term note program was established and three drawdowns were completed with a total of RMB 3.25 billion and USD 450 million respectively, including RMB 3 billion of three-year bonds with an interest rate of 5.75%, RMB 0.25 billion of five-year bonds with an interest rate of 6.875%, and USD 450 million of perpetual securities with a distribution rate of 7.125%;

    2) BCL was provided with sufficient financial support through real estate funds, equity financing and insurance funds, including two real estate funds co-issued with CITIC Trust, which have raised RMB 3 billion with the total value reaching RMB 4 billion;

    3) RMB 2 billion was raised in cooperation with the People's Insurance Company of China (PICC) at a low financing cost – five-year term at 8.3%; and RMB 1.22 billion was raised in cooperation with Ping An Insurance at a low cost – eight-year term at 7.6 %.
  • 5. How is BCL reducing its liability ratio?

    Answer
    BCL will increase cash flow returns, and its contracted sales are expected to pick up rapidly, targeting at RMB 35 billion in 2015. Cash inflow from operating activities is expected to increase significantly in 2015, while the company plans to quickly liquidate its non-core assets. In addition, BCL is paying close attention to the issuing of A-share market registration system in China to increase its equity capital. Meanwhile, it is exploring an asset-light strategy, for example, through REITS; and enlarging BCL's scale by cooperating with equity funds.
  • 6. How is BCL's performance on overseas investment?

    Answer
    In recent years, overseas investment by China's corporate and individual investors is increasing significantly, as overseas markets are providing tremendous opportunities. BCL has adopted the "Going-out" strategy and seized new opportunities to accumulate cross-border cooperation experience and build itself into a global brand, while shielding against the risk of cyclical fluctuations resulting from a single market by allocating resources globally.

    In July and November, 2014, BCL successfully invested in two Australian residential projects in cooperation with two local developers. Situated well geographically and close to railway stations, the two medium-high grade residential projects in Erskineville and Carlingford Districts of Sydney were sold out within the year, achieving a contracted value of about RMB 2.3 billion. In the first half of 2015, BCL invested in three new projects together with local developers. Cooperation will go deeper in the second half year. Offering new developing opportunities, the overseas business has become one of the most important business sections of BCL.
  • 7. How is BCL's performance on outlets projects? What is the future development planning?

    Answer
    Among BCL's outlets property lines, the first outlets project went into operation in 2013, and another two outlets projects opened for business in 2014. Located in Beijing, Huzhou and Hainan respectively, the three outlets are all awarded the title of "National AAA Level Tourist Destinations". BCL is planning to invest 1-2 outlets in 2015, particularly in sub-centers and outlying areas of core cities. It will continue to enhance cooperation with international and domestic well-known brands to further promote the brand of "Capital Land Outlets." By the end of 2014, the total amount of BCL's cooperative brands had increased to 674, among which 68 are strategic co-brands, laying a solid foundation for the development of the outlets brand nationwide.

    The outlets that have opened for business include Beijing Fangshan Outlets, Hainan Wanning Outlets and Zhejiang Huzhou Outlets.

    ——The Phase I of Fangshan Outlets, covering a leasable area of about 62,000 m2, went into operation in May 2013. The sunken plaza area of the Outlets, which opened for business in January 2014, drove up the overall turnover of Fangshan Outlets significantly, leading the Fangshan Outlets to stand out among its national counterparts with an annual turnover reaching RMB 900 million.

    ——The Phase I of Hainan Wanning Outlets, covering a leasable area of about 30,000 m2, started business in October 2014. It had realized an annual turnover of RMB 450 million and attracted 1.1 million global customers. As the biggest discount store with the largest number of international brands of note in Hainan Province, it is now home to Gucci, Prada and other big brands.

    ——The Huzhou Outlets also opened in 2014, with a total leasable area of 48,000 m2. By the end of 2014, 67 brands had opened their shops here.

    ——The Kunshan Outlets will start business in the second half of 2015.
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