(Bloomberg) -- China Vanke Co., one of China’s biggest developers, just swooped in to scoop up land in the heart of Guangzhou, a giant southern city. The deal was announced just as founder Wang Shi is handing over the reins to Yu Liang. Here’s five things to know about a mega-transaction that came out of nowhere.
1. $8 billion deal
The price tag: 55.1 billion yuan ($8.1 billion). The former owner: Guangdong International Trust & Investment Corp., that went bankrupt almost two decades ago. The package includes: 16 parcels of land expected to have a gross floor area of 2.1 million square meters, along with “creditor’s rights."
2. Empire State, multiplied
Vanke’s plans represent the equivalent of eight Empire State Buildings. That’s based on the floor area that the company envisages as it develops residential and commercial properties, hotels and offices.
3. Chinese record
Bloomberg Intelligence analyst Patrick Wong said the purchase amount was a record for a developer in China, surpassing China Overseas Land & Investment Ltd.’s agreement last year to pay 31 billion yuan for a portfolio of Citic Ltd. residential properties. Hong Kong’s biggest land purchase was Henderson Land Development Co.’s HK$23.3 billion ($3 billion) acquisition of the Murray Road car park building in May.
4. Swelling landbank
The 2.1 million square meters of gross floor area is a tiny fraction of Vanke’s holdings -- at the end of last year the company had 107 million square meters of projects planned or under construction.
5. Rare site
BI analyst Kristy Hung said the deal was significant because of Guangzhou’s very limited land supply, with Vanke’s properties in the core areas of Liwan and Yuexiu, not fringe areas. Hung said the purchase didn’t seem too pricey on the face of it, working out at about 26,000 yuan per square meter. Some Guangzhou sites have gone for more than 40,000 yuan per square meter. Still, it’s difficult to assess the deal without knowing more about the structure, including any debt, Hung said. Vanke says one partner will invest in the projects and that it will negotiate with more potential partners.