DNE Group: New economy thrives in a tough year

Investors remained disciplined in 2023, but DNE’s resilience enabled it to capital raise and expand its portfolio, says Dongping Sun, chairman and chief executive officer.

This article is sponsored by DNE Group

What were your firm’s key events in 2023?

Dongping Sun

DNE raised a total of nearly $3.2 billion in new equity across both US dollar and RMB funds covering several of our new economy sectors, including manufacturing workshops, logistics warehouses and life science parks. We formed a new partnership with Bain Capital and were supported by a number of domestic and foreign institutional investors, both long-term partners and new investors.

We also set up two new US dollar funds focused on the manufacturing workshops sector, an asset class on which our China real estate investment trust, DNE C-REIT, focuses. DNE C-REIT reported distributable dividends nearly 8 percent higher than forecast thanks to almost 100 percent occupancy  throughout 2023. We believe this sector will be a growth engine in future.

What has the operating environment been like?

The market was full of challenges last year, as there was a continued economic shift and evolving stakeholder requirements. We encountered some bottlenecks and difficulties, but believe these are manageable and temporary.

We also saw that not everything is pessimistic. New economy sectors such as life science parks, manufacturing and the new energy sector showed steady growth compared with other sectors, especially in the coastal cities where our assets are located. Furthermore, we believe the Chinese economy has extraordinary resilience and investors need to have both confidence and patience to weather the prevailing economic cycle.

What key challenges did you have to overcome?

The overall capital market was challenging, particularly with regard to offshore investors getting more selective and disciplined. This creates complexity for developers like us who need capital to expand our AUM. Another challenge that we were facing at the start of 2023 was leasing, as we completed development of over a million and half square meters over the past year.

For capital raising, our diversified business scope allowed us to focus on areas of strength, such as the manufacturing sector. When the other sectors were relatively less favored by the capital market, we managed to raise capital by leveraging on the good performance of our investments in the manufacturing workshops. Meanwhile, our leasing team delivered a satisfactory result by maintaining a high level of occupancy to meet the leasing challenge and reassured confidence of our capital partners.

Who or what is responsible for your success?

There are three key aspects to which we can attribute our success. Firstly, I am very grateful for the collaboration and hard work of our team, which is rich in experience and determined to deliver their best for our company.

Secondly, trust is a crucial part of our business. In such a challenging year with a weakened economy, building trust with our capital partners is why we were able to achieve good fundraising results.

Finally, we must also recognize the support we have had from the government in this challenging environment. Without government support, we were unable to access land resources in good value, while favorable policy allows us to smoothly complete our development projects. We feel quite grateful to be able to gain continuous support from local governments to help us achieve our goals.