This year has seen a resurgence in the issuance of public REITs. According to Wind statistics, as of July 2nd, nine public REITs have been successfully issued this year, with a total fundraising amount of nearly 23.7 billion yuan, surpassing both the quantity and scale of last year's total.
However, looking at the secondary market performance, the valuations of public REITs are generally at a low level. Following a significant drop of 4.5% on July 1st, the China Gold Pudong Logistics REIT continued to decline on the opening of July 2nd. As of the time of writing, it was reported at 3.394 yuan, setting a new low for the past four months.
In terms of news, the China Gold Pudong Logistics REIT announced that the lessee of the infrastructure projects it holds intends not to renew the lease and will return the premises in batches in advance.
Overall, among the 36 public REITs products that have been listed and traded, 20 are in a state of being below their issue price, accounting for about 56%. Moreover, there is a clear divergence in the market segment, with products closely related to the real estate industry, such as industrial parks and storage logistics, showing more significant declines.
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Industry insiders analyzed to First Financial that after the adjustment in the secondary market this year, public REITs have started to rebound. Currently, the valuation of REITs in the secondary market is at a low level, and the trends of different varieties are diverse. In the long term, as various market entities continue to join, the types and quantities of underlying assets will continue to increase, enhancing the stability of the REITs market. The configuration value becomes more prominent, and there is still room for development in the future.
Several industrial park REITs face early lease terminations. The China Gold Pudong Logistics REIT manages 10 warehousing and logistics parks with a total leasable area exceeding 1.16 million square meters, primarily earning income through leasing and property management services. Among them, the Pudong Logistics Park, as a key park, is recently facing lease adjustments.
According to the announcement released by the fund on June 28th, Jiangsu Jingxundi Supply Chain Management Co., Ltd. (hereinafter referred to as Jiangsu Jingxundi) originally leased nearly 159,100 square meters of the Pudong Logistics Park, accounting for 13.68% of the total leasable area of all infrastructure projects of the China Gold Pudong Logistics REIT.
However, due to adjustments in the leasing plan, Jiangsu Jingxundi decided not to renew part of the leased area after its expiration on August 31, 2024, and the remaining part will be returned in batches in advance. After negotiation, both parties agreed to return about 82,000 square meters of the area on June 30, 2024, and the remaining part will be returned in batches.The announcement also mentioned that in the first quarter of 2024, the rental and property management service income contributed by Jiangsu Jingxun Express reached 16.815 million yuan, accounting for 14.34% of the total income of all infrastructure projects of CICC-Pudong Warehouse Logistics Trust. As of the date of the announcement, the occupancy rate of the 10 warehousing and logistics parks is approximately 86.25%, and the contracted occupancy rate is 89.68%. After Jiangsu Jingxun Express's withdrawal, the expected occupancy rate is expected to drop to about 79.19%, and the contracted occupancy rate will decrease to 88.69%.
It is worth noting that in addition to CICC-Pudong Warehouse Logistics Trust, several industrial park REITs have recently been subject to early lease terminations.
For instance, Huanan Zhangjiang Industrial Park REIT holds two infrastructure projects, Zhangjiang Everbright Park and Zhangrun Building. In July 2023, the occupancy rate of Zhangrun Building was affected by the early withdrawal of the major tenant, Zheku Technology. On January 29, 2024, another tenant, A, at Zhangrun Building also prematurely terminated the lease. This tenant plans to prematurely withdraw from part of the area in Zhangrun Building on January 31, with a withdrawal area of 3,904.58 square meters, accounting for 49.8% of the originally leased part.
The first quarter report of 2024 released by Huanan Zhangjiang Industrial Park REIT shows that during the reporting period, the net absorption of Shanghai's industrial parks was 47,000 square meters, a year-on-year decrease of 9%, and the overall vacancy rate increased to 19.6%.
The first quarter report of 2024 released by CCB Zhongguancun Industrial Park REIT also shows that during the reporting period, the vacancy rate in the Beijing industrial park market was 20.5%, with the vacancy level still at a high level, and the rent continued to fall, decreasing by 0.8% quarter-on-quarter to 117.5 yuan/square meter/month.
In addition, looking at the performance in the secondary market, among the 36 publicly traded public REITs products, those with asset types of warehousing and logistics, and industrial parks led the decline.
Within the past year, Huanan Zhangjiang Industrial Park REIT has seen a cumulative decline of over 25%, while Bosera Shekou Industrial Park REIT, CCB Zhongguancun REIT, Harvest JD Logistics Infrastructure REIT, and Dongwu Suyuan Industrial Park REIT have cumulatively fallen by 19%, 15%, 15%, and 11% respectively during the same period.
Dividends are relatively stable.
Despite the differentiated performance in the secondary market, the dividends of public REITs products have remained stable.
According to the First Financial Daily's statistics from Wind, as of July 1, among the 36 publicly traded public REITs products, 31 have implemented dividends.In this context, four REITs with the asset type of transportation infrastructure have relatively large dividend distributions. Ping An Guangzhou-Guangzhou River REIT, CICC Anhui Traffic Control REIT, Zheshang Shanghai-Hangzhou-Ningbo REIT, and Guojin China Railway Construction REIT have cumulatively distributed dividends of 1.553 billion yuan, 1.464 billion yuan, 1.302 billion yuan, and 875 million yuan, respectively. Following these are Penghua Shenzhen Energy REIT and another Penghua Shenzhen Energy REIT, with cumulative dividend distributions both exceeding 800 million yuan.
Moreover, despite leading declines in the secondary market, REITs with asset types in warehousing logistics and park infrastructure have relatively high dividend distributions. Specifically, CICC Prologis REIT has completed seven dividend distributions, with a cumulative allocated amount reaching approximately 767 million yuan, which accounts for about 100% of the distributable amount since its listing. The Jia Shi JD Warehouse Infrastructure REIT's first quarter report for 2024 shows that the fund achieved a distributable amount of 20.037 million yuan during the reporting period and has conducted the second dividend distribution for the fiscal year 2023, with an actual distributed amount of 25.2099 million yuan.
China AMC believes that a long-term high dividend payout ratio has become the most important product attribute of public REITs. Going forward, it depends on the professional management of high-quality underlying assets. High-performing REIT products can achieve stable returns and cash flows, and will exhibit more stable performance resilience, with a high dividend payout ratio expected to continue.
Recently, the trend of public REITs accelerating expansion is quite evident.
On June 28th, China AMC's first outlet REIT and Huatai Nanjing Jianye REIT were officially approved. Among them, China AMC's first outlet REIT is the first consumer infrastructure REIT in China with outlet projects as the underlying assets, and Huatai Nanjing Jianye REIT is the first infrastructure public REIT project approved in Nanjing city.
So far, 12 public REITs have been officially approved within the year, with another 10 in the stages of feedback received, accepted, or inquired.
In addition, looking at the products that have been issued, as of July 2nd, nine public REITs have been successfully issued within the year, with a total fundraising amount of nearly 23.7 billion yuan. Compared to the situation in 2023 where six public REITs raised 20.1 billion yuan for the entire year, the first half of this year has already exceeded the level of the previous year.
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