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China Fund News reporter Fang Li and Lu Huijing

Recently, some new strategic placement investors have appeared in the public REITs market. In addition to traditional strategic placement investors such as original equity holders, insurance companies, and bank wealth management, institutions including guarantee agencies, private equity funds, and industrial investment companies have also begun to appear in the strategic placement list of public REITs.

Strategic placement investors of public REITs

Types are becoming more diverse

In June this year, the Industrial Yinhe North Expressway REIT was issued.Shenzhen Guarantee Group Co., Ltd.As a strategic investor, it subscribed for 16.63 million fund shares, with a total investment of 94.7577 million yuan. In addition, Shenzhen Guarantee Group Co., Ltd. also participated in the strategic placement of China Fortune International Warehousing and Logistics REIT, investing nearly 50 million yuan to subscribe for 19.98 million fund shares.

Industrial investors also appear in the strategic placement list of China Fortune Shenzhen International Warehousing and Logistics REIT.Shenzhen Caiwuwei Industrial Co., Ltd.As other professional institutional investors, it invested nearly 20 million yuan to subscribe for 7.98 million fund shares.

In addition, companies such as Shanghai COSCO Huili Construction and Decoration Co., Ltd. and Shanghai Jiashu Construction Group Co., Ltd. appeared among the strategic placement investors of China Resources Commercial REIT.

Talking about the newly emerged investors mentioned above,Wan Yi, professional deputy director of REITs investment team of China Merchants FundHe said that recently, from the war allocation list of some newly issued REITs, some non-traditional institutions have indeed been seen, such as guarantee institutions, private equity funds, industrial companies, etc. Some of these institutions are original equity holders or their affiliates under the same control, and some are suppliers or consulting companies that have relevant industry synergies with the original equity holders.

In his opinion, these new entrants generally have sufficient funds, lower liability costs, a higher tolerance for short-term market fluctuations, and focus on the long-term investment value of public REITs. They are incremental funds for the REITs market and also reflect the further enrichment of the REITs market's investor structure.

"We have noticed that some large guarantee companies have participated in the strategic placement of recently listed REITs products."AVIC Fund Real Estate Investment DepartmentHe said, "In the current market, with the implementation of favorable policies related to public REITs, the continuous emergence of incremental funds, and the return of asset valuations to rationality, public REITs have attracted more 'patient capital' that adheres to the long-term investment philosophy to join."

Focus on indicators such as project fundamentals and cash distribution rate

Unlike traditional financial institutions, the investment preferences of newly-entered guarantee institutions, industrial investment companies, and private equity funds for public REITs are also a topic of concern in the market.

According to Wanyi’s feedback, these non-traditional institutions are relatively more concerned about the absolute value of the distribution rate, and also the stability of the distribution rate. Therefore, in terms of product selection, they often focus on new energy products with high short-term distribution rates and relatively stable distribution, as well as individual warehousing and logistics products with certain location advantages.

The Real Estate Investment Department of AVIC Fund pointed out that non-traditional institutions investing in public REITs will still analyze the project fundamentals, such as cash distribution rate, income and EBIDTA completion. In addition, future operating expectations will also be an important reference for institutional investors. "From the current market perspective, since the dividends of operating income right assets include principal and interest, the cash distribution rate will be relatively high, and non-traditional institutions currently mostly prefer such assets. Investors generally hope that dividends can reach the predicted value, but the specific dividend income expectations also depend on the capital costs of each institution."

A person from Pioneer Rich Fund also said that judging from the recent REITs projects, funds generally favor weak-cycle projects with stable cash flow returns, with new energy projects being the most popular. For example, the oversubscription multiples of two new energy projects, China Special Electric Power New Energy REIT and CITIC Construction Investment Mingyang Smart Energy REIT, were both close to 70 times.

Strategic placements are clearly differentiated

With the entry of new institutions such as guarantee agencies and industrial investment companies, the current REITs strategic placement market is showing obvious differentiation.

Wanyi said that recently, there has been a great polarization in the strategic placement of public REITs. Some REITs projects have been sought after by funds, and investors have shown great enthusiasm in both strategic placements, offline investments and public subscriptions. However, there is still great pressure on new projects, and investors have shown great differentiation in their judgments on the investment value of different types of REITs projects.

"In the short term, it is expected that the market's perception of different types of REITs projects is unlikely to change, and the liquidity of the REITs market is limited. The trend of funds concentrating on individual projects and the differentiation of industry trends and investment enthusiasm may continue." Wan Yi said that whether the pricing logic of the REITs market will change in the future remains to be further observed.

The Real Estate Investment Department of AVIC Fund also stated that since the first batch of public REITs were listed, the structure of strategic placement investors has been constantly changing and becoming more diversified. At present, in addition to the original equity holders and related parties, insurance institutions and securities companies are still the main participants in the strategic placement of REITs. In addition, industrial capital, private equity funds, bank wealth management, asset management companies, etc. are also important participants in REITs.

"At present, the strategic allocation structure of REITs is generally still dominated by the original equity holders and their affiliates. According to public information, among the newly issued REITs in the first half of this year, after excluding the impact of the original equity holders and related parties, securities companies, industrial capital and insurance companies have a high degree of participation, and the strategic allocation scale accounts for approximately 28%, 25% and 19% respectively." A relevant person from Pioneer Rich said.

The above-mentioned person further stated that in terms of asset types, the asset allocation preferences of various institutions also vary. Among them, securities companies are more inclined to choose franchise rights, while industrial capital and insurance account for a relatively high proportion of property rights.

Editor: Xiaomo

Review: Xu Wen

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