The first anniversary of the listing of the first batch of public infrastructure REITs: the market is running smoothly and the industry agglomeration effect is emerging

It will be the first anniversary of the first batch of public infrastructure REITs listed.

As the promotion of the healthy development of REITs in the infrastructure sector has been included in the “14th Five-Year Plan” and the 2035 Vision Outline, all parties have reached a consensus on the important role of public REITs in implementing new development concepts and building a new development pattern. A new investment and financing market of the order of magnitude will be “launched” in due course on June 21, 2021.

After a year of exploration, improvement, and innovation, the pilot of publicly offered REITs can now be described as a fragrant spillover. As the preferred way to revitalize existing assets, REITs have played an important role in effectively reducing the current government debt risk and corporate debt level, and improving the level of infrastructure operation and management. As a new exit method for infrastructure construction investment, REITs are of great significance in broadening social financing channels, raising incremental funds for infrastructure construction, expanding effective investment, and forming a virtuous cycle of investment and financing.

A number of experts interviewed by the “Securities Daily” reporter said that under the joint efforts and care of many parties, the pilot program of my country’s public REITs is running smoothly, and the effect of industrial agglomeration is beginning to appear. In the future, encouraging more high-quality and mature projects with rich asset types to enter the market, expanding the market scale, and promoting the high-quality and sustainable development of the industry are the goals of the next stage of the public REITs market.

Institutional rules are gradually improved

The market development ecology is further improved

One year after the successful listing of the first batch of publicly offered REITs, it has effectively filled the product gap in the domestic asset management market, and has also written a splendid stroke in the development of the capital market.

This year, the performance of the first batch of publicly offered REITs was basically in line with market expectations, and the pilot work got off to a good start.

The first batch of publicly offered REITs drove the construction of 300 billion yuan of new infrastructure projects. As of June 19, the first batch of 9 products has risen by an average of 22% since the launch, and the average daily turnover rate is generally higher than that of mature overseas markets. At the same time, judging from the 2021 annual report of the first batch of products, the performance of infrastructure assets has been excellent, resulting in stable distributable cash flow and dividend income. The actual amount available for distribution exceeded expectations, totaling about 1.78 billion yuan; all 9 products issued dividend announcements, with a total dividend of about 1.22 billion yuan, accounting for about 60% of the actual amount available for distribution.

A number of institutions participating in the first batch of public REITs projects said that the operating data and secondary market performance of the products were stable, even exceeding expectations.

Li Jun, Deputy General Manager of Soochow Fund REITs Headquarters, told a reporter from Securities Daily, “Since listing a year ago, Soochow Suyuan Industrial REIT asset operation and management efficiency has been continuously improved and optimized, and various operational indicators of the two park asset projects have rapidly improved. The fund’s financial indicators and dividend distribution are better than expected, and the secondary market price has risen steadily. In the future, with the continuous improvement of asset quality and operation level, the value of the project is expected to continue to be tapped and enhanced.”

Song Xin, general manager of the real estate investment department of AVIC Fund Management Co., Ltd., introduced to a reporter from Securities Daily that since the listing of AVIC Shougang Green Energy REIT, both the operating data of the underlying assets and the performance of the secondary market have exceeded expectations. At present, the product has achieved two dividends, which has been affirmed by investors.

CICC Plus REIT also paid dividends twice. According to the relevant personnel of CICC Fund, “the operation of the project’s underlying assets is stable, and the overall performance is relatively stable.”

This year, the system and rules were gradually improved, and a favorable environment for the development of the REITs industry was gradually formed.

Since the listing of the first batch of publicly offered REITs, government departments and regulatory agencies at all levels have attached great importance to the construction of the REITs market, and have issued supporting rules to promote market development. On June 29, 2021, the National Development and Reform Commission issued the “Notice on Further Doing a Good Job in the Pilot Work of Real Estate Investment Trusts (REITs) in the Infrastructure Sector”, expanding the pilot area to the whole country, expanding the scope of assets, and improving the initial offering and expansion of fundraising. Scale requirements, etc., to promote the expansion of project assets; on November 17 of the same year, the China Banking and Insurance Regulatory Commission issued the “Notice on Matters Related to Insurance Funds Investing in Publicly Raised Infrastructure Securities Investment Funds”, introducing insurance funds into the market and improving the liquidity of the REITs secondary market; On January 26, 2022, the Ministry of Finance and the State Administration of Taxation jointly issued the Announcement on the Pilot Tax Policies for Real Estate Investment Trusts (REITs) in the Infrastructure Sector, clarifying the preferential tax policies.

In addition, local governments or regulatory authorities in more than 10 cities across the country have issued policy documents on REITs to actively encourage local enterprises to participate in the pilot program. The Shanghai and Shenzhen Stock Exchanges, in collaboration with government departments and regulatory agencies at all levels, support the improvement of the REITs rule system. On May 31, 2022, the REITs expansion rules will be released to simultaneously optimize the expansion mechanism.

Expansion is on the agenda

Asset types welcome expansion

The aforementioned participating pilot institutions have put the expansion of public REITs on the agenda.

Wang Qiaochu, REIT fund manager of Bosera China Merchants Shekou Industrial Park, told the “Securities Daily” reporter, “China Merchants Shekou Industrial Park has a rich asset reserve, including assets under construction, opening, and maturity, and will continue to plan and research to inject suitable internal mature assets. Bosera Shekou Production Park REIT.”

CICC Fund has always attached great importance to the expansion path of the public REITs market. The relevant personnel of the company revealed that they will actively research and promote the expansion attempt of public REITs with partners within the framework of policies and regulations.

“AVIC Fund is actively exploring the expansion of assets. After the introduction of supporting policies in the future, it will start the expansion work in due course.” Song Xin said.

Sun Guiping, senior fund analyst and doctor of Shanghai Securities Fund Evaluation and Research Center, told the “Securities Daily” reporter that the continuous optimization of the policy environment and the superposition of primary and secondary market linkages have enabled REITs to maintain a certain degree of market popularity and influence, and promote the high quality of the REITs market. develop.

This year, the gradual enrichment of asset types will help to achieve high-quality development of infrastructure construction.

Listing the first batch of projects is just the beginning. Benefiting from the development of public REITs in line with the policy orientation, some high-quality mature projects have entered the market one after another, and the types of underlying assets have become increasingly abundant.

Up to now, there are 12 listed public REITs in my country, and the projects are distributed in key national areas such as Beijing-Tianjin-Hebei, Yangtze River Delta, Guangdong, Hong Kong and Macao. ; The project raised a total of 45.8 billion yuan, which was mainly invested in key areas such as technological innovation, green development, and people’s livelihood to make up for shortcomings in infrastructure, effectively helping infrastructure construction, and promoting the integration of industry and finance and local economic development.

In addition, some public REITs projects are “on the way”, and the asset types have been expanded to affordable rental housing and power generation infrastructure. According to data from the Shanghai and Shenzhen Stock Exchanges, in addition to the China National Gold Railway Construction Chongqing Yusui Expressway Closed Infrastructure Securities Investment Fund, which will be released on June 21, there are currently 5 projects lined up for review. The success of the demonstration projects has further enhanced the enthusiasm of enterprises holding high-quality infrastructure assets in various regions and fields. Currently, there are more than 100 single reserve projects in progress.

According to the relevant personnel of CICC Fund, “CICC Fund and its parent company CICC are continuing to promote the application of pilot projects of public offering REITs, and the basic assets of the project cover affordable rental housing, highways, railways, data centers, clean energy and other competitions. road.”

Dong Zhongyun, chief economist of AVIC Securities, told the “Securities Daily” reporter that the increase in the types of publicly offered REITs has stimulated the enthusiasm for market participation, and will attract more infrastructure construction investment and financing parties that meet product requirements to “shake hands” in the capital market.

The first batch of restricted shares will welcome the lifting of the ban

Promote market supply and demand balance

As a result of reform and innovation in the capital market, the market initially took a wait-and-see attitude towards the prospect of publicly offered REITs, fearing that they would be both popular and cold. Looking back at the achievements made by the first batch of projects in the past year, it can be preliminarily determined that the pilot work of publicly offered REITs has achieved stable listing, stable trading, stable operation, and stable expectations.

However, it may be due to a slight shortage of “ammunition” in the market leading to an imbalance in the supply relationship, and there is an excess premium in the current public REITs in circulation. According to the data, as of the close of June 17, the premium rates of AVIC Shougang Green Energy REIT, Fuguo Capital Water REIT, and Hongtu Yantian Port REIT exceeded 30%, 43.07%, 38.68%, and 34.45%, respectively.

“Although the public REITs market has undergone a certain degree of adjustment since the beginning of this year, some high-quality products still maintain a high premium rate, and the scarcity of high-quality assets is the main reason.” Sun Guiping analyzed that there are only 12 public REITs listed at present, and most of them are listed on the market. The share is locked, and the average liquid share of each product is only about 30%, which cannot meet the long-term allocation needs of funds.

It should be noted that the first batch of 9 publicly offered REITs with a total of 2.192 billion restricted fund shares will be lifted on June 21, and the lifted shares will account for 32% of the total size of the 9 publicly offered REITs.

Dong Zhongyun told reporters, “After the lifting of the ban, the circulating share of publicly offered REITs will greatly increase, which may alleviate the problem of insufficient supply to a certain extent. It is expected that more high-quality infrastructure assets will be launched in the capital market through publicly offered REITs in the future, and the market supply and demand will increase. achieve a better balance.”

However, in Sun Guiping’s view, although lifting the ban can alleviate the scarcity of assets to a certain extent, it is expected that the premium rate will be adjusted in the short term, but the adjustment may not be large. Small public REITs are more likely to be reduced, and investors should pay attention to the risk of short-term price fluctuations.

“In the long run, public REITs, as high-quality assets, will be familiar to more and more investors in the future, the demand for asset allocation will continue to increase, and the scarcity of high-quality REITs will still exist.” Sun Guiping suggested that public offerings can be accelerated in the future. The release speed and product innovation speed of REITs have introduced more high-quality assets to match investment needs.

Closely linked to major industrial strategies

Help stabilize the economy

“Since this year, the policy side has continued to release positive benefits, and public REITs have become one of the important means to revitalize existing assets and expand effective investment, and also one of the necessary means to implement the national major industrial strategy.” Li Jun, deputy general manager of Soochow Fund REITs headquarters If so.

The “Opinions on Further Revitalizing Existing Assets and Expanding Effective Investment” issued by the General Office of the State Council clarifies that it is necessary to establish and improve the fundraising mechanism and explore the establishment of a multi-level infrastructure REITs market. The China Securities Regulatory Commission recently held a special meeting to make it clear that more efforts will be made to help stabilize the macroeconomic market, and “research and broaden the scope of infrastructure REITs pilots” is listed as one of the main means.

Dong Zhongyun said that in the current critical period of economic transformation between old and new kinetic energy, as an IPO of assets, publicly offered REITs have gradually been given greater responsibilities. They must bring “source of living water” to infrastructure and provide high-quality development of regional economies and key industries. New strategic tools to further enhance the quality and efficiency of the capital market in serving the real economy.

Further “penetration” of the aforementioned 12 publicly offered REITs is not difficult to find. Although the number and scale are not large, the underlying assets corresponding to them are all important carriers for the high-quality development of China’s economy.

“The issued projects cover toll roads, industrial parks, sewage treatment, ecological environmental protection, warehousing and logistics and other basic asset types, all of which are high-quality assets with good qualifications and high returns, and closely follow the direction of medium and long-term industrial policies.” Dong Zhongyun further analyzed and said For example, the active development of energy and environmental protection REITs is intended to implement the “dual carbon” goal, the continuous promotion of industrial park warehousing and logistics REITs can actually help regional economic development, and the in-depth promotion of transportation REITs is to release new funds for future investment and construction of comprehensive three-dimensional transportation networks. source etc.

“The development of a trillion-yuan REITs market is not only an urgent need for short-term stable economic growth, but also an inherent need to serve my country’s long-term high-quality economic growth.” In Sun Guiping’s view, the number and market size of listed projects are still relatively low. It is small, and the types of underlying assets involved are not rich enough, which does not match the scale of my country’s huge infrastructure stock assets. In the future, publicly offered REITs still have broad development potential.

[Editor in charge: Cao Jing]

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