Gelonghui, May 14, 丨 Excellent Commercial Enterprise Service (06989.HK) announced that on May 13, 2024, Excellent Property (a wholly-owned subsidiary of the company) and Excellent Real Estate signed a framework agreement. According to this, Excellent Real Estate will conditionally acquire and Excellent Real Estate will prompt entities to conditionally sell parking spaces, at the maximum cost of no more than RMB 598 million.
According to the framework agreement, Excellent Property will be conditionally acquired and Excellent Real Estate will enable the entity to conditionally sell 10,301 parking spaces until the respective expiration dates of the land use rights on the relevant plot where the parking space is located. Since all parking spaces are located in Shenzhen, and none of the parking spaces can be registered as property rights, asset transfers are carried out by transferring the right to use parking spaces. The right to use parking spaces includes, but is not limited to, all ancillary rights such as ownership, disposal, rental, operation, management, and revenue.
The parking spaces are located at (i) Shenzhen Excellent Victoria Harbour; (ii) Queen's Road; (iii) Huanggang Business Center; (iv) Shenzhen Times Square; (v) Shenzhen Excellence City; (vi) Shenzhen Excellent Houhai Financial Center; (vii) Shenzhen Qianhai Qianhai No.1; (viii) Shenzhen Qianhai Times Square; (ix) Shenzhen Excellent Midun Road; and (x) Prestige Parking Spaces. As of the date of this announcement, the Group currently leases and operates parking spaces on a leased basis. The rent is equivalent to a portion of the total revenue from parking spaces.
Given the combined impact of the sharp increase in car ownership in China in recent years and the relatively low ratio of cars to parking spaces, parking spaces in core commercial districts, high-end office buildings, and high-end residential buildings are even more scarce, and are considered to have potential room for development. The company plans to further expand the scale of its parking space related business, through parking space acquisitions and subsequent leasing of parking spaces to owners, tenants or visitors managing the property to expand the scale of the company's revenue, thereby bringing more impressive returns to shareholders. The expansion of the parking space business division will also help establish a more diversified commercial supporting value-added business structure, which is in line with the company's business strategy to develop diversified and differentiated high-quality value-added services.
The parking spaces are located in Futian, Shenzhen, Nanshan CBD office buildings, shopping centers and high-end residential areas in Shenzhen. Based on historical operating data, this business can provide the company with stable income, profit and operating cash flow without interruption, so it has been economically proven to be a viable and profitable business. At the same time, parking space rental services have a short settlement period, mostly prepayment, daily settlement, and monthly settlement; thereby optimizing operating cash flow and enhancing the company's liquidity and financial flexibility. Furthermore, as supporting facilities in residential communities, commercial offices, and shopping centers, parking spaces can improve the quality of on-site management and further enhance customer satisfaction by providing services such as temporary parking, monthly rental, or long-term rental.