A consumer infrastructure Real Estate Investment Trust (REIT) that primarily owns large shopping malls was listed on the Shenzhen Stock Exchange on Friday, which is expected to help stimulate consumption in China while bringing benefits to asset owners and investors.
As China's first public mall REIT of the year, it was jointly listed by the China International Capital Corporation (CICC) and the Capital Group Dividend Growers ETF (CGDG) -- a few days after six state organs jointly issued guidelines on ramping up financial support to effectively boost consumption.
The product raised 1.58 billion yuan (about 220 million U.S. dollars), with an offline subscription multiple of 249 times, setting a new high for similar assets.
As a consumer infrastructure REIT, its underlying asset is large shopping centers in Jinan, east China's Shandong Province.
"The assets include hotels, premium shopping malls, large cultural tourism resorts, and health and senior care projects, with a total investment of nearly 70 billion yuan. Going forward, we will fully promote the injection of more high-quality consumer assets into the REITs pool in phases, continuously expanding the scale of the platform and enhancing asset returns," said Yang Ronggang, chairman of Shandong Luneng Commercial Management Company, a subsidiary of CGDG.
Unlike other infrastructure REITs, consumer infrastructure REITs feature large-scale investment, highly market-oriented operations, and strong growth potential.
Moreover, as their underlying assets are shopping malls and department stores, they are closer to people's daily life and thus attract greater public attention.
Favored by policies for stimulating consumption, the role of consumer infrastructure REITs in serving the real economy is becoming increasingly prominent.
"Issuing REITs can revitalize existing assets and attract new investment. It helps enterprises reduce their debt ratio while enhancing their reinvestment capacity and profitability. Besides, the issuance of consumer infrastructure REITs can help operators improve management efficiency through scale effect, information disclosure transparency, and incentive mechanisms," said Li Yaoguang, managing director of CICC Fund.
The REITs products are financial tools to pool capital for developing real estate projects. China kicked off a public REITs pilot program in infrastructure in 2020.
In October 2023, the National Development and Reform Commission expanded the pilot asset types eligible for public REITs to include consumer infrastructure. Prior to the CICC CGDG REIT, eight such products had been listed, all receiving overwhelming market response.
As more high-quality projects emerge, consumer REITs are expected to become a key growth driver in the public REITs market, providing investors with more attractive options.
Mall REIT listed on Shenzhen Stock Exchange, expected to boost consumption
