My Age of Investment

   Chapter 1269 The true meaning of repair

   "Buy," refers to the acquisition of high-quality, income-producing assets at a price lower than replacement cost;

  Repair means that the fund actively participates in the management and operation of the invested companies, and quickly resolves its capital structure problems, flaws and various operational problems;

  Sell, once all the problems are resolved, the operation of the enterprise is on the right track, and the time for the fund to exit is ripe.

   This is the three-step strategy of real estate funds, very simple and clear.

   But in practice, you will find that it is far less simple than imagined.

  Especially the second step of repair, it is a test of the operation level of a real estate fund, and it is also related to the ultimate profit of the fund. "

   The group was walking on the streets of downtown San Francisco, Xia Jingxing tilted his head and introduced the dog beside him.

   Beside him, Ivanka, Liu Xiaoduo, Zhang Chenguang and several bodyguards were also followed.

   More than half an hour ago, the plane landed at San Francisco International Airport, and then Xia Jingxing and the others were brought to the downtown CBD by the dog who came to greet them.

   They are going to take a look at the nearly 300 houses that the dog bought together, and discuss the next operation strategy of Vision Home.

   The little dog smiled and said: "Boss, I seem to have heard of your three-step strategy theory there?"

   Hearing this, Ivanka looked at Xia Jingxing with a smile, wanting to see what he had to say.

  Xia Jingxing chuckled and made a mistake.

   His theory did not fool Ivanka, who has been well-informed since childhood and is extremely familiar with the real estate field. Now even a puppy can’t fool her.

   "Real estate funds are all operating in this mode, and there are similarities between companies."

   Xiaodog frowned towards Xia Jingxing and said, "So that's how it is, I'm just saying how this theory is so close to Blackstone's real estate fund operation model."

   Hearing this, Ivanka couldn't bear it any longer, and burst out laughing.

"why are you laughing?"

  Xia Jingxing glanced at Ivanka, spread his hands and said, "Everyone understands the theory, the key depends on their operational level."

   The little dog nodded like a dog's leg, "The boss is right, Blackstone's theoretical level is very high, but his practical level is terrible.

  In May 2007, when the subprime mortgage market was already showing signs of bad things, Blackstone's management insisted on strongly promoting the Hilton acquisition, which had been negotiated for nearly a year, on the basis that their company was about to go public and became rich.

   In the end, Blackstone acquired and privatized the Hilton Hotel at a premium of 40% with an investment of $5.6 billion, plus a $20.5 billion loan from debt investors such as Goldman Sachs, Bank of America, Merrill Lynch, and Deutsche Bank.

  After the transaction was completed, the 10 hotel brands owned by Hilton, 2,800 hotels around the world, and nearly 500,000 rooms were all acquired by Blackstone.

   But now the U.S. and even the global economy is in recession, and the tourism and hotel industry is in recession.

   If it weren't for the more than 20 years of Blackstone's gold-colored signboards there, I think Goldman Sachs, Bank of America, and Deutsche Bank would have turned the table. "

  Xia Jingxing looked at the puppy with a smile, "Okay, I've gotten good at it lately! In a few years, I'll have to mess with you."

   "I'm all hearsay, it's not as good as the boss, you are in the middle of the strategy, and the decisive victory is thousands of miles away!"

   The little dog is very modest, although he has been studying and making up classes frantically in the past two years, but he does not think that his level is comparable to Xia Jingxing, even one tenth or one percent.

  Xia Jingxing looked at Ivanka and said, "You are so familiar with the Hilton sisters, are they very proud of this deal?

   I think that I sold the family business left by my great-grandfather for a good price, avoiding the financial crisis, and there is still a chance to buy it back at a low price in the future. "

   Ivanka's mouth opened wide, and she was very surprised, "How do you know? Their sisters have often shown off this deal in front of me, saying how their family is far-sighted.

   is not to sell ancestral property, but an investment strategy.

  Blackstone defended their family, and they said they were very grateful to Mr. Schwarzman (Schwarzman). "

  Xia Jingxing smiled and said, "In a few years, I hope they can still laugh like they do now."

  Ivanka heard the overtones, and quickly asked: "You are very optimistic about this deal? Do you think Blackstone can transform Hilton?"

  Xia Jingxing pointed out two fingers, "Black Stone has two major advantages!

   First, they have a good reputation and brand for more than 20 years, and have maintained good relations with various large financial institutions on Wall Street. They are very good at dividing cakes and making friends.

  I have heard the grapevine that the CEO of JP Morgan is eager to get rid of Hilton's $4 billion loan.

   But now that the financial crisis has broken out, JP Morgan simply cannot package these loans into securities and sell them to various investors.

   As for drawing the ladder, JP Morgan didn't even think about it. At most, he made a few complaints in the circle, and hoped that Blackstone would express something after hearing it.

   The second biggest advantage of Blackstone is the loan agreement.

   Generally, if a company experiences operating losses for several consecutive quarters, creditors will demand immediate repayment of the loan.

   While Blackstone relies on past performance and reputation, the loan contract signed does not have any such so-called supplementary agreement, so it will not trigger the condition of early loan repayment. "

  The dog opened his eyes and said, "Blackstone has borrowed more than 20 billion US dollars in loans, and the conditions are so loose?"

  Xia Jingxing responded with a smile: "What do you think? Wall Street has always liked to push the high and the low. Even if the contract is a bit harsh, there are still a lot of people rushing to send money to Blackstone."

   "Fake~"

   The puppy uttered a foul language, feeling that it was unreasonable.

  Xia Jingxing sneered: "This is the same as the technological advantages of technology companies, financial companies' brands and performance are strong enough, so they will naturally receive preferential treatment.

   And Blackstone knows how to take advantage of this advantage, otherwise how could they create so many successful leveraged buyout cases?

With a breather, Blackstone launched a drastic reform within Hilton, moving its headquarters from Beverly Hills, California to a more cost-effective Virginia, while further promoting the Hilton Group's franchise strategy and slashing operating costs. Wait.

  Blackstone has done a lot of work on cost reduction, efficiency enhancement, and open source.

   But these are not enough.

   Blankfein told me that Blackstone recently wanted to talk to their group of debt investors, asking creditors to delay loan repayments. "

   Ivanka, who loves business and loves to learn, listens very seriously. This is the top business information on Wall Street, which is not accessible to ordinary people.

   She couldn't help but ask: "Do you think Goldman Sachs and the others will agree to Blackstone's request?"

  Xia Jingxing nodded lightly, "I will definitely agree, the key depends on how much interest Blackstone is willing to give away, it is estimated that there will be a debt restructuring and a wave of debt-to-equity swaps.

   At the same time, Blackstone will definitely inject capital into Hilton again to show many debt investors that it is determined to run Hilton well. "

  Ivanka suddenly realized, nodded and said: "I understand! But all of this is based on Blackstone's more than 20 years of brilliant success. It is difficult for ordinary institutions to replicate this kind of operation."

  Xia Jingxing nodded lightly, he originally had the idea of ​​acquiring Hilton, but after careful consideration, he realized that he might not be able to play.

   I have to say that Blackstone still has the real ability. It chose the worst time to acquire Hilton. The financial crisis broke out just after the acquisition was completed. Everyone was waiting to see Blackstone’s joke.

   As a result, Blackstone has completed a counterattack, and the leveraged buyout of Hilton has created the most lucrative investment in private equity history, with a net income of more than 14 billion US dollars.

   Among them, the pick-up man China Hehang Group, who likes to buy and buy overseas, contributed US$6.5 billion in revenue.

   Because of this and several other lucrative real estate investments, Jonathan Gray, the head of the Blackstone Real Estate Fund, was directly designated by Schwarzman as his successor.

  Xia Jingxing looked at Ivanka and the dog and said, "Have you understood the true meaning of "repair" now?"

   Both nodded, each realizing something in their hearts.

   (end of this chapter)