Chapter 125: Borrowing Another HK$130 Million!
In fact, Lin Haoran's judgment was remarkably accurate.
If he had studied the detailed history of Hong Kong's real estate market, especially the golden years from 1978 to 1981, he would have been astonished by the market's insane surge.
Starting in 1978, Hong Kong's property market took off like a runaway horse, racing far beyond the bounds of normal growth.
Take East Tsim Sha Tsui as an example. In just three years—from early 1978 to mid-1981—land prices skyrocketed by an astonishing six to seven times, while housing prices followed closely behind, rising by more than threefold.
Such explosive growth not only attracted a flood of local capital but also drew in overseas investors from Southeast Asia and elsewhere, who poured into Hong Kong to buy land and develop buildings, further driving up the market and creating an unprecedented investment boom.
So, comparatively speaking, investing directly in land was even more profitable!
By now, it was already February 1979. Although a year had passed since the beginning of 1978, making another sixfold increase in land prices unlikely, buying land now and holding it until 1981 still offered a very good chance of tripling one's investment.
Of course, Lin Haoran didn't know these detailed historical figures. His understanding came only from what he had read online in his previous life. He knew that Hong Kong would experience a real estate crisis in 1982, and that before such a crisis, excessive speculation would drive property prices to irrational heights, ultimately creating a bubble.
Based on that limited knowledge alone, he could already conclude that land prices would absolutely soar alongside housing prices over the next two years.
Just like the bidder Yang Mingyi had mentioned—the rival from four years ago had already doubled his profits last year through the property developed on that parcel of land.
But if that person had continued holding the completed development and sold it this year instead of last year, the profits would have doubled again. Selling next year would likely double them once more over this year's level.
"All right. Make the necessary preparations and inform them that Wan'an Group will also participate in this auction. I'll head to HSBC," Lin Haoran said decisively.
That's right—he was going to borrow money again.
This time, however, it wouldn't be in his own name, but in the name of Wan'an Group.
If he borrowed from Yumin Finance Company, he could obviously obtain a larger loan. But Lin Haoran had no intention of doing that, because he had already borrowed more than HK$300 million there under his personal name.
If he borrowed again under Wan'an Group's name, his ties with Yumin Finance Company would become far too extensive.
For his own safety, he decided not to consider that option for now.
With his current status, getting a loan was easy no matter where he went.
As far as he knew, bank lending rates had risen along with the booming property market. But compared with the gains expected in real estate over the next two years, that interest was practically insignificant.
Half an hour later, Lin Haoran appeared once again in Michael Sandberg's office.
Having visited twice already, he was now quite familiar with the place.
"Mr. Lin, what brings you here today?" Michael Sandberg asked with a smile.
He had just returned from handling business outside and happened to have no urgent matters, so he agreed to meet Lin Haoran.
"I'm here to discuss another business deal with HSBC," Lin Haoran replied with a smile.
"Oh? What kind of business?" Michael Sandberg asked in surprise.
"This time, the borrower isn't me, but Wan'an Group. If Wan'an Group wants to borrow from HSBC, how much credit can you offer?"
"Wan'an Group? That depends on whether you're seeking a secured or unsecured loan. If it's secured, the amount depends on the collateral. If it's unsecured, I can approve a credit line of HK$50 million immediately."
Without hesitation, Michael Sandberg answered directly.
Previously, Michael Sandberg hadn't been familiar with Wan'an Group. He only knew it was a listed company.
But after getting to know Lin Haoran, he had deliberately investigated his background and gradually gained a detailed understanding of the group.
Because of that, he knew Wan'an Group was an exceptionally high-quality company whose stock market valuation was far below its actual value.
He loved lending to quality companies because the risk was low.
"If I use the title deed of Wan'an Group Tower as collateral, how much could I borrow?" Lin Haoran asked.
Based on current market valuations, Wan'an Group Building alone was worth over HK$100 million—roughly equal to the company's entire market capitalization.
That showed just how undervalued Wan'an Group was.
Aside from this office building, the group's only other major property asset was the parcel of land under development in North Point.
Even so, the value of its property holdings alone amounted to around HK$200 million.
In the past, Lin Wan'an had distributed part of the company's annual profits as dividends every year. In his view, money in hand was safer than money sitting on the company's books.
As a result, Wan'an Group had never expanded rapidly. Besides avoiding debt, another reason was that Lin Wan'an withdrew profits from the company every year.
Of course, looking after his own interests was perfectly understandable. It was precisely because he had continuously extracted profits from the group that he accumulated such a large fortune, which was later inherited by Lin Haoran and Lin Haoning.
"If it's the title deed for Wan'an Group Building, I can approve a loan of up to 80% of its market value. As for the exact value, our appraisers will need to assess it," Michael Sandberg replied cautiously.
Eighty percent?
Lin Haoran nodded. That was about what he expected.
By his own estimate, 80% of the building's value should allow him to borrow at least HK$100 million. The exact amount would depend on HSBC's professional appraisal.
"Very well. Then I'll trouble HSBC to conduct the appraisal. I intend to use Wan'an Group Building as collateral. However, I hope your side can move quickly, as Wan'an Group needs the funds soon."
He didn't mention that he intended to bid on land.
"Please rest assured, Mr. Lin. The appraisal can be completed as early as today. As for the loan process, I can approve an expedited channel for you," Michael Sandberg said with a smile.
"Thank you, Mr. Sandberg. In that case, I won't take up any more of your time."
Lin Haoran stood up.
He had already explained the purpose of his visit, so there was no reason to stay longer.
"Very well. Take care, Mr. Lin. I'll call you with the results no later than tonight."
Michael Sandberg personally escorted him to the office door.
Business was business.
After returning to Wan'an Group Building, Lin Haoran continued discussing the group's future development plans with Yang Mingyi.
Around six in the evening, he finally received a personal phone call from Michael Sandberg.
"Mr. Lin, after thorough analysis and professional evaluation by our banking team, taking into account the excellent location of Wan'an Group Building, its actual floor area, market trends, and other factors, we've determined that its current market value is approximately HK$165 million.
Based on our policy of lending up to 80% of the appraised value, Wan'an Group qualifies for a loan of approximately HK$132 million."
Hearing this, Lin Haoran was pleasantly surprised.
He hadn't expected the amount to be so high.
Originally, he would have been satisfied with HK$100 million. Since he could borrow more, he naturally wouldn't refuse.
Then again, property prices had continued rising since last year. The building might have been worth just over HK$100 million in the middle of last year, but at HK$165 million now, there was nothing unusual about it. That was simply the market.
"Excellent. Thank you, Mr. Sandberg. Tomorrow morning I'll bring Wan'an Group's lawyer, the title deed, and the necessary documents to HSBC to sign the contract."
"Very good, Mr. Lin. I'll personally be waiting to welcome you."
Michael Sandberg's laughter over the phone sounded especially cheerful.
This was a major deal.
HSBC would earn a considerable amount of interest from this loan.
The next morning, Lin Haoran led Wan'an Group's core management team, including General Manager Yang Mingyi, to HSBC with the complete ownership documents for the group's headquarters to finalize the loan details.
Since Michael Sandberg and Lin Haoran had already discussed the main terms beforehand and all required documents were fully prepared, the signing and approval process went extremely smoothly.
In less than two hours, all procedures were completed.
The final loan amount was set at HK$130 million with a three-year term.
At maturity, the principal and interest would be repaid in a lump sum, and the title deed would be redeemed.
Both parties also agreed that if the loan was repaid early, the interest would be reduced proportionally according to the actual borrowing period. This clause was written into the contract.
It was a condition Lin Haoran had specifically requested because he had no intention of keeping the loan for the full three years.
At the latest, he planned to sell his properties by mid-1981.
By the second half of 1981, property prices would likely begin to decline, making sales much more difficult.
Therefore, the ideal time to sell would be during the hottest period of the market in the first half or around the middle of 1981.
With HK$130 million in hand, Lin Haoran believed he could acquire multiple high-quality parcels of land.
Stockpiling land was his investment objective this time.
Under normal circumstances, doubling or tripling his investment within two years would be no problem.
As for buying land and constructing buildings?
There simply wasn't enough time.
Lin Haoran had no intention of using Wan'an Group's funds for short-term investments in oil, gold, and similar assets the way he did with his personal funds.
After all, he had no intention of making his personal investment activities public.
If he used the group's funds, as a listed company, those investments would have to be disclosed in its financial statements.
His personal funds, on the other hand, could be invested however he pleased.
Naturally, he wanted to maximize his returns.
Therefore, he had no intention of putting Wan'an Group's funds and his own personal funds on the same investment path.
"Mr. Sandberg, it's been a pleasure working with you."
Lin Haoran smiled as they shook hands.
"Likewise. I wish your investments every success."
Michael Sandberg smiled in return.
For HSBC, this loan was undoubtedly a stable, low-risk transaction.
With Wan'an Group Building serving as collateral, the bank's funds were well protected.
Naturally, HSBC was delighted to support Wan'an Group in every possible way for such a virtually risk-free business.
(End of Chapter)
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