On February 18, 2022, Shanghai Construction Group Equity Investment Fund Management Co., Ltd. (SCG Fund) and ACR Asset Management (ACR) duly entered into a strategic partnership agreement to co-invest in real estate projects and leverage their respective strengths in finance and asset management. Present in the signing ceremony were the management teams of both parties, including Chairman & GM, Mr. Fang Song, Chief Investment Officer, Mr. Wang Haiping, and Mr. Han Xuan, GM of Investment Management Department of SCG Fund, as well as ACR's Chairman, Mr. Edward Cheung, Investment Managing Director Mr. Leo Chen, and the investment, financing, and asset management teams.

As a specialized PE fund manager of Shanghai Construction Group, SCG Fund's main engagements are city redevelopment, city-building and financing, real estate finance, and rental apartments. ACR is a comprehensive real estate investment and asset management company. The company delivers strategic added value to commercial real estate projects by repositioning, industries-oriented operations and asset management.

Looking ahead, ACR and SCG Fund will drive partnership in equity cooperation, co-initiation of buyout fund and Pre-REITs fund, and asset securitization, and the parties aim for co-building projects with market influence - enhancing synergy in urban renewal assets, business park properties, and other fields of real estate investment.

(Reported by China Real Estate Finance after an exclusive interview with Edward and the management team.)

Following his departure from Cushman & Wakefield, Edward Cheung founded YESS SPACE in 2019—an integrated real estate operational service platform—on the heels of the establishment of his real estate fund management company ACR Asset Management (ACR).

"Although the real estate industry has long been dominated by pure third-party services, these services and their business models have become outdated and are struggling to keep up with the evolution of the industry. Instead, a new business model that champions the integration of both real estate fund management and operational management will dictate future market opportunity." Cheung asserts at the YESS SPACE press conference. Cheung elaborates that there will be no shortage of market investment opportunity or capital post-pandemic; however, he indicates that what the market lacks is asset management capacity and innovative methodologies. Moving forward, he considers the future direction of real estate investments and asset management of utmost importance.

Doubling down: China's urban renewal

Edward Cheung was once Chairman of the Board of Directors of Cushman & Wakefield Asia Pacific and CEO of the Greater China region. Cheung established Cushman's business development in Greater China and spearheaded the merger between DTZ and Cushman & Wakefield—effectively establishing himself among the pioneers of China's real estate advisory services. After nearly three decades of experience driving the development of China's real estate market, Cheung transitioned from advisory services to the real estate investment market in 2019 when he co-founded ACR Asset Management, a real estate fund management company, with GLP.

"From Europe to the States, from Hong Kong to the Mainland, the real estate advisory model has matured to the point where deviation from the norm has become near non-existent; and I constantly find myself wondering where the new, exciting opportunities are in the real estate market." Cheung states that the Chinese market has been developing at an overwhelming pace and the malleability of the market has left a unique "China Model" imprint on the development tracks of many industries. Cheung affirms that this transformation can also apply to China's real estate market. He believes that a departure from the pure-third party service models that have dominated the real estate industry for a new, more innovative model will serve to appease the increasing demands of the growing sector. Moreover, he believes that a necessary breakthrough point to meet growing market demand is in the integration of operational management capability in real estate investment and how it better facilitates the cycle of "financing, investing, managing, and exiting." Cheung believes that a business model that champions both capital and asset management will lead to unlimited business opportunities.

"ACR Asset Management was established to facilitate a new business model, one that integrates fund management with real estate operational management, to manage the entire life cycle of assets and to realize their appreciation in value. Cheung states that ACR has acquired a group of outstanding real estate talent and integrated their professional experience in industry investment, remodeling, and operations with industry-oriented positioning and optimization so as to realize the strategic appreciation of assets.

In May 2021, ACR announced its entry into the Beijing Market in its acquisition of the Beijing Diamond Building, an R&D office project owned by Sino-ocean Capital. With a construction area of about 22,000 square meters, this property is located in the Zhongguancun Software Park in Shangdi District, which forms industrial clusters in cloud computing, big data, Internet, and artificial intelligence. In terms of asset class, the Beijing Diamond Building fits well with Edward Cheung's investment scope. "The Beijing Diamond Building project is operating very well."

"Innovating" Real Estate Management "Methodology"

In line with his strategic focus of both asset-light and asset-heavy approaches, Edward Cheung founded an asset-light platform, YESS SPACE, on the heels of establishing the asset-heavy investment platform ACR.

According to Edward, YESS SPACE—an integrated real estate service platform under ACR—implements a "trusted operation" model for owners by providing a plethora of asset management services, including asset planning and positioning, transformation and upgrading, investment and operation management, and other related services. YESS SPACE's core business focuses on the two major operational real estate sectors of stock renewal and science and innovative parks. By creating and implementing asset features that embody the YESS Strategy (young, eco-friendly, smart, and sharing), YESS SPACE seeks to inject value and vitality into real estate management. Edward Cheung describes ACR and YESS SPACE as the "double chariots" of both his asset-light and asset-heavy approaches. Whereas ACR's strength lies in investment and financing, YESS SPACE's advantage is in its abiltity to enhance project operations and service quality.

"We want to deliver the best returns for investors and partners through our YESS Strategy." Said Terence Zhang, a partner at YESS SPACE. He asserts that YESS SPACE as a light asset management platform does not only provide asset operation and management services for ACR, it also aims to work in tandem with ACR throughout the investment and management process, in addition to providing and exporting operation services to the wider market.

According to Gu Haifeng, Managing Director of YESS SPACE, YESS SPACE is different from the asset-light management model common in other markets, because YESS SPACE's "distinctiveness" lies in its technical concept and advanced management methodology. "Assets are financially driven, but more important for asset management is the ability to export. In the investment sector, we are a node to bond the owner's technical service providers; in the management sector, we serve as the system that facilitates the entirety of the life cycle and service providers for technology integration. For YESS SPACE to keep up with the pace of the times, environmental protection, smart technology, and management capabilities need to be integrated together for investors and owners to create a better and more comprehensive service," said Gu Haifeng to China Real Estate Finance.

"Deep ploughing" Science and Technology parks to promote the development of REITs

In line with its strategic focus of both asset-light and asset-heavy approaches, YESS SPACE is currently in charge of revitalizing three business park projects in Shanghai and Beijing: the I-Park Pujiang and I-Park Jing'an in Shanghai, and the Diamond Plaza in Beijing.

Terence Zhang states that "in the near future, YESS SPACE will focus on two major sectors for business opportunities. The first is to focus on the industrial sector: to manage more high-quality science and innovation park projects and facilitate their integration into China's core urban clusters, especially the Yangtze River Delta. The second focus is to bolster urban renewal: to target inefficiently utilized properties in the city center and provide a one-stop operation service for under-valued property."

For YESS SPACE's positioning in the business park office space,? How do we build out asset management capacity? Terence said that this is reflected in four aspects: First, the YESS SPACE team realizes the full life cycle of operations in accordance to office user demand, as it facilitates a whole cycle of planning positioning, transformation and upgrading, investment leasing and industrial services, including landing. Second, in view of the special requirements of a project, the YESS SPACE team can mobilize the effective resources of ACR and its strategic partners to provide customers with various solutions, such as supply chain financial services in the industrial sector and architectural design consulting services for old park projects. Third, from a core management perspective, YESS SPACE will stand in asset holders' shoes to examine the construction of an asset operation service system, taking full account of investors' positioning of asset holdings and the need for liquidity.

On June 21, 2021, China's first batch of nine infrastructure REITS were officially listed on the Shanghai-Shenzhen Stock Exchange, covering four major infrastructure types – warehousing logistics, industrial parks, toll roads and environmental protection facilities – raising a total of 31.4 billion yuan. Among them, Shekou Industrial Zone REIT, Zhangjiang REIT, Dongwu-Suzhou Industrial Park REIT accounted for one-third of the first publicly traded REITs, making it the largest listed sector for infrastructure REITs. The public offerings of industrial park REITs were successfully listed and traded, as a result of the underlying assets' profitability. In Edward Cheung's view, the first batch of REITs proves historically significant for the development of China's real estate market. He believes that the market will introduce more types of REITs—such as apartments, hotels, and office and business holdings—in the future.

"The ultimate goal of YESS SPACE is to become a public REITs asset manager," said Edward Cheung.

Musk Yang joined ACR Asset Management in October, 2021. He has acquired a total volume of more than 2,000 mu of industrial land in the past 17 years' work experience. He is experienced in management, real estate investment , investment strategy planning, acquisition, post-investment management, risk control management, real estate fund operation, urban renewal and asset management.

Before joining ACR, he was the head of Investment and Financing Centre and Assistant General Manager of Shanghai Vanke industrial& city development Co. LTD , Deputy General Manager at Vantone Industrial Real Estate of east China area (the first industrial private equity) , Investment General Manager at Gemdale Industry Real Estate of east China area , Investment General Manager of 8 Bridge Urban Renewal Asset Management Inc, Investment Deputy Director at Hong Kong LSH Group Industrial Real Estate.

Musk Yang received a bachelor's degree of Business Administration in Shanghai University of Engineering Science and a master's degree of EMBA from Tongji University. He is also qualified by International Certified Management Accountant (ICMA) and National Registered Real Estate Planner.

ACR Asset Management was named "Best Asset Manager for Risk Control 2021" by the 2021 BRIC Forum. Despite uncertainty in the commercial real estate industry, ACR Asset Management, underpinned by its prudent investment strategy and management capacity, has earned not only investor trust, but also industry recognition.

After going through changes due to economic uncertainty in 2019, China was negatively impacted by the COVID-19 pandemic in 2020. The commercial real estate sector, which is closely related to overall economic performance and activity, also faced greater pressures during the pandemic. In the capital market alone, the total transaction volume in the past year was at a five-year record low.

The team at ACR believes that the key to future investments is to seek relative certainty amid uncertainty and adopt more prudent investment strategies. During these difficult times, the team quickly shifted focus to market segments less affected by COVID-19, paying close attention to property investment opportunities with good cash flows. One such area is in China's growing high-tech industry, which has seen increasing demand for quality R&D properties. Stable and ever-growing, R&D property investments are also popular with international investors. Winning this award will further strengthen ACR's faith in its "value investing" philosophy. During this time of economic transformation, ACR will proactively seek investment opportunities to thrive out downward cycles, and continue its risk management efforts.

ACR Asset Management today announced that its Beijing Diamond Plaza has secured investment from Mitsubishi Estate Co., Ltd. After closing the deal, ACR and  Mitsubishi Estate will jointly own the project.

Located in the Zhongguancun Software Park in Beijing and among a cluster of hi-tech industries, the Diamond Plaza is a fast-growing and fully-occupied R&D property in the region. With Beijing gaining momentum as a national center of technology and innovation, market demand for premium research and development properties in Shangdi is booming accordingly.

Leo Chen, Managing Director, Investment at ACR, said, "Mitsubishi Estate is Japan's largest real estate developer. We feel proud of having such an outstanding partner, and are privileged to work with Mitsubishi Estate in these exciting times."

Edward Cheung, Founder and Chairman at ACR, added, "It's a great pleasure to co-invest in the Beijing Diamond Plaza project with Mitsubishi Estate. This cooperation proves that our business park investment strategy has won international investors' recognition. It is with our utmost excitement that we join hands with our partner to explore future opportunities in the Chinese market."

ACR Asset Management announced that the firm, through a real estate private equity fund under its management, has acquired Beijing Diamond Plaza from Sino-Ocean Capital.

Located in the Zhongguancun Software Park, center of the Shangdi Sub-district, Haidian District, Beijing, the Diamond Plaza is a low-density and beautiful R&D building. In close proximity are the head offices and global R&D centers of hundreds of renowned IT companies, both domestic and international. As China's economic recovery from the COVID-19 pandemic continues, tech firms have assumed the mantle of new growth drivers, thus resulting in a rising demand for R&D properties within the territory of Zhongguancun and neighboring Shangdi. As such, the Diamond Plaza enjoys a positive outlook on the leasing market, and a high potential for appreciation.

Edward Cheung, Founder and Chairman at ACR, said, "We are pleased to have finalized the takeover of the Diamond Plaza with Sino-Ocean Capital. In this takeover, we adopted our investment strategy to respond to the near-term economic transition and market adjustment, namely, focusing on dynamic sub-markets in China's emerging industries, such as hi-tech innovation park properties that act as platforms for industrial innovation. We have confidence that such properties, entitled to a development bonus under the 14th Five-Year Plan, will demonstrate considerable growth in the coming years.

Leo Chen joined ACR Asset Management in March, 2021. Leo Chen has over 18 years of real estate experience working with top tier investment banks and real estate developers.

He was founding member, Chief Investment Officer and Managing Director at V Capital, in charge of investment and fund raising. He sourced the deals of Corporate Avenue 3 and Central Plaza, led fund raising from two prominent HK families and executed the deals with AUM of over 1.3 billion USD. These two deals instantly made V Capital into a serious player in Chinese private equity real estate market. He closed 10,000 sqm tenants in asset management capacity.

Leo Chen holds BS degree from Shanghai Jiao Tong University, MS degrees from Stockholm School of Economics and Chalmers University of Technology; major in Finance and Engineering Mathematics.