Indonesia’s Sinar Mas Group Approved to Issue RMB 22.9B in CMBS

A unit of Indonesia’s Sinar Mas Group won approval this month to issue China’s largest ever commercial mortgage-backed security (CMBS) based on a single real estate asset, according to a recent announcement by the Shanghai Stock Exchange.

Sinar Mas’ mainland China subsidiary was approved to raise RMB 13.8 billion ($1.95 billion)  through a CMBS backed by its Sinar Mas Centre development in Shanghai’s Hongkou district, which was formerly known as White Magnolia Plaza.

The group’s application for the financing product was approved the same day that Sinar Mas received permission for another CMBS backed by a second Shanghai commercial development, granting the Jakarta-based conglomerate, in a single day, licenses to raise a fresh RMB 22.9 billion through securities backed by real estate assets in the city.

Sinar Mas Centre Refinanced

The largest chunk of Sinar Mas’ new financing initiative is backed by the SInar Mas Centre on Shanghai’s East Daming Road, which is dominated by a pair of towers, including a 320-metre-tall structure which is the city’s tallest building west of the Huangpu River.

The first stage of the waterfront project just north of Shanghai’s traditional Bund area was finished in 2017 after originally starting construction in 2009. In its 320-metre tower one, the project provides grade A office space, while tower two houses the W Shanghai — The Bund hotel.

The complex, which yields a total of 420,000 square metres of space, including 260,000 square metres above ground, also has a separate 90,000 square metre shopping centre which held its grand opening in April of this year.

The Sinar Mas Centre is 25 percent owned by Hong Kong-listed developer Hong Kong Construction (HKC), which is controlled by Oei Tjie Goan, known in Indonesian as Teguh Widjaja. Oei is the eldest son of Asia Pulp and Paper founder Eka Tjipta Widjaja, who emigrated from Fujian province to Indonesia in 1930, and the brother of Sinar Mas chairman Franky Oesman Widjaja.

Monetising Hongqiao’s Shanghai Arch

On 14 August, Sinar Mas Paper also received approval from the Shanghai Stock Exchange to issue RMB 9.01 billion in CMBS backed by its Shanghai Arch project in the city’s Changning district.

This second set of securities enables Sinar Mas to monetise the 262,476 square metre complex on Mao Tai Road in Shanghai’s Hongqiao area after completing the office project in 2014.

Sinar Mas, which is one of Indonesia’s biggest real estate developers, had developed the John Portman & Associates-designed Shanghai Arch through a joint venture with Shanghai’s municipal investment firm Shanghai Chengtou Group Corporation, together with Shanghai Lianhe Property Development Limited Company and Shanghai Yiduan Investment Co., Ltd.

In addition to the Shanghai Sinar Mas Plaza and the Shanghai Arch, Sinar Mas has also developed the Shanghai Bund Center and the Ningbo Sinar Mas Plaza in Zhejiang province.

Sinar Mas Pulp and Paper, which produces and distributes its products under the Asia Pacific Paper (APP) brand, is a subsidiary of Indonesia-based Sinar Mas, with the paper-maker in 2005 having been famously de-listed from the New York Stock Exchange.

APP was booted from the US exchange after the company’s financial problems in the wake of the Asian financial crisis led it to declare a moratorium on $13.9 billion in debt, a move which led to one of Asia’s largest debt defaults ever.