China REITs Property Landlords to Shine - DBS
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59
SECTOR BRIEFING
number
DBS Asian Insights
DBS Group Research • May 2018
China REITs
Property Landlords to Shine
DBS Asian Insights SECTOR BRIEFING 59 02 China REITs Property Landlords to Shine Ken HE Equity Analyst DBS (Hong Kong) ken_he@dbs.com Carol WU Head of Greater China Research DBS (Hong Kong) carol_wu@dbs.com Danielle WANG CFA Equity Analyst DBS (Hong Kong) danielle_wang@dbs.com Derek TAN Equity Analyst DBS Group Research derektan@dbs.com Jason LAM Equity Analyst DBS (Hong Kong) jasonlamch@dbs.com Produced by: Asian Insights Office • DBS Group Research go.dbs.com/research @dbsinsights asianinsights@dbs.com Goh Chien Yen Editor-in-Chief Jean Chua Managing Editor Martin Tacchi Art Director
DBS Asian Insights
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04 Executive Summary
08 China REITs Are Lagging
Edging Towards Onshore REITs
18 Major Obstacles in Fostering
an Onshore REIT Regime
CMBS/CMBNs Are Growing Faster
C-REITs Are Imminent
28 Which Asset Type Will Benefit
More?
Modern Logistics Properties
The Rise of Active Property Asset
Management
Which Developer Will Benefit From the
Establishment of C-REITs?
49 AppendixDBS Asian Insights
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Executive Summary
T
No REIT regime yet he real estate investment trust (REIT) has become an important investment vehicle
as evidenced by its separation from the financial sector in the Global Industry
Classification Standard as a sector on its own. Major Asian countries/regions have
joined western countries to kickstart local versions of REITs, leaving China the last
big economy that has yet to have such an investment vehicle.
Two major technical In our view, removing legislative obstacles (publicly traded funds are not allowed to
obstacles hold commercial properties) is the first step that the government needs to take towards
establishing a modern REIT regime. Near-term relaxation could be allowing mutual funds to
invest in onshore pre-REITs. Currently, the government is fine-tuning regulations whereby
a single mutual fund is not allowed to invest over 10% of its total net asset value (NAV) in
one single security and a single fund management company is not allowed to invest over
10% stake in one single security.
Taxation is a more complicated obstacle as there are central/local tax (國稅地稅) systems
in place. We think a waiver of taxes related to asset transfers is required to develop a REIT
regime, as this is one of the biggest concerns for – and a huge burden on – landlords to
build a REIT platform. So far, under the current taxation scheme and regulations, onshore
pre-REITs have complicated structures to save on/avoid some taxation. Having said that,
taxation, in our view, is a factor determining the market size of China REITs (C-REITs), rather
than an obstacle preventing the establishment of C-REITs, as offshore C-REITs also need to
pay various taxes in China.
Other areas that China needs to fine-tune to foster an ecosystem for C-REITs include a
unified product structure, a standardised valuation methodology, a transparent credit rating
system, and supervision of special-purpose vehicles (SPVs).
Onshore pre-REITs The origin of C-REITs can be traced back to 2005, when the first red-chip REIT – Yuexiu REIT
– was launched on the Hong Kong Stock Exchange (HKEx). However, the development of
the sector has largely stagnated until the emergence of onshore REIT-like securities in 2014.
Currently, there are 28 quasi-/pre-REITs (類/准REIT) which are primarily debt-like vehicles and
barely resemble an equity-REIT in other countries, as the government aims to manage the
risks of such products at the initial stages and believes that a debt structure is more secure
than an equity one.
But the fact is those pilot debt-like products have a less favourable risk/return profile
compared to offshore C-REITs as (i) their leverage is high, ranging 50-70% versus 20-40%DBS Asian Insights
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of their offshore peers’; (ii) the coupon rate has been low at 4-7%, versus an average yield
of 6-9% of offshore peers’ (total returns could be higher, including capital gains); and (iii)
those pre-REITs are all held by private funds with fewer than 200 investors, pointing to limited
liquidity. Other problems existing in some products include low interest coverage, having a
single underlying asset or single end-customer, the parent company’s credit enhancement,
and a vague credit system. In our view, relaxation of policy and taxation is needed to foster
a better ecosystem for growing equity-REITs.
CMBS are growing The big difference is, compared to REITs, that commercial mortgage-backed securities
faster (CMBS) do not involve asset transfers, avoiding the two key obstacles faced by onshore
REITs. Compared to traditional bank loans, CMBS enjoy lower funding costs and better
liquidity. CMBS kicked off in August 2016 and have witnessed faster growth since then.
A recent spate of policies has led us to believe that the long-awaited C-REIT is imminent,
even if the initial structure of the REIT may not be similar to that of offshore REITs.
(i) Continuous deleveraging efforts: Top governors have reiterated the need to put more
effort into ensuring financial security and healthy economic growth. This can be tracked
from the deceleration in the growth in banks’ assets. According to Standard & Poor’s,
growth in banks’ assets was 5.5% in 8M17, much lower than an average of 15.2% during
the past five years, and also the first time this figure has dipped below the corresponding
GDP growth. The government has been pushing other sectors to swap debt for equity to
help them deleverage. But unfortunately, the property sector is one of the few sectors that
have been gearing up despite strong property sales. We believe the government may switch
its focus to deleveraging in the sector after successful destocking, and C-REIT could be an
effective way.
(ii) Weaken residential properties’ attractiveness as investments: Local governments
have implemented a series of policies (including purchase/sell/mortgage limitations) with the
intention of managing residents’ expectations on housing prices. Meanwhile, the central
government has attached more importance to long-lease rental apartments, proposing to
give more incentives (including land supply and tax incentives) to this segment. Three million
units of rental housing are targeted to be supplied in trial cities, which is huge compared to
the average annual sales of 1.7mn units during 2013-2016 in those cities. And we believe
China needs the REIT platform to hold these rental-housing assets over the long term. In
addition, the first pre-REIT for long-lease rental apartments was launched on the Shenzhen
Stock Exchange on 3 November 2017, prompting some industry experts to expect the
breakthrough in onshore REITs to come from long-lease rental apartments.
(iii) Develop commercial properties’ function as investments: The regulators have been
speeding up the drafting of the REIT code recently. In addition, the issuance of onshore pre-REITs
has also accelerated. Apart from this, a new policy which aims to encourage the conversionDBS Asian Insights
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of commercial land/properties to long-lease rental apartments was introduced. As mentioned
above, the upcoming C-REITs could be public funds with investment targets in onshore pre-
REITs, which do not look exactly like REITs envisioned by overseas investors. Yet, this vehicle
should greatly improve the liquidity of commercial properties and unlock book value.
Commercial properties We expect the investment focus to gradually switch from residential properties to commercial
to outperform? properties. Based on our study, the capital value of commercial properties in Japan and
Hong Kong has outperformed residential housing prices after the introduction of local REITs.
In addition, we are seeing big potential in C-REITs. REITs’ market cap as a percentage of
local GDP average 6.0% in major Asia-Pacific countries. Even if we conservatively assume
a 1% figure for China, C-REITs’ market cap could potentially be US$115bn. In our view,
the required yield return of C-REITs will likely fall in the 5.5-6.0% range, compared with the
current China 10Y government bond yield of 3.9%, the latest weighted-average rate of
4.5% for wealth management products (WMP), and the current offshore C-REITs’ yield of
between 6% and 9%. The yield spread (above China 10Y government bond yield) is likely
to be 2%, compared to c.3% for HK REITs and Singapore REITs (S-REITs), which could be
justified by higher asset appreciation potential in China.
Which asset type to We expect hotel and retail mall assets to benefit more from liquidity improvement. In
benefit more? addition, in anticipation of C-REITs, active property asset management / redevelopment and
conversion of hotel or retail malls to offices are rising, especially in Beijing and Shanghai.
Modern logistics Both assets generate relatively stable cashflow and require less operating capability.
properties and Grade-A Therefore, both assets have been chased by financial investors and insurance companies
offices during the past two years. As the renminbi (RMB) has reversed its downward trend, foreign
capital has also been flowing into these two assets. This, coupled with stricter capital
outflow, should continue to drive up the capital value of both assets.
We are positive on the logistics property sector and we expect state-owned enterprises
(SOEs) and market consolidators that have better access to industrial land to benefit more
from the potential establishment of C-REITs. Shenzhen Chiwan used to be the second-largest
warehouse play in China, but its development over the last two years has been dragged
by its B-share status. The company is expected to leverage the potential establishment of
C-REITs to quicken its asset turnover and grow its portfolio. Vanke-H/A, being the largest
warehouse play (a part of a consortium involved in an ongoing transaction to take GLP
private), is also a key beneficiary.
For Grade-A offices, we are positive on Shanghai, Guangzhou, and Shenzhen, but cautious
on Beijing traditional core areas as long-term demand in Beijing will likely be diluted by the
rise of Tongzhou and Xiong An New District. We expect SOHO to benefit more from asset
disposals, given investors’ appetite for prime office assets.DBS Asian Insights
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Premium retail malls In our view, the market is overestimating the risk of oversupply and underestimating the
recovery in retail sales. Our analysis suggests that four types of malls will outperform: (i) Existing
luxury malls in Tier-1 cities, as they will benefit from strong retail sales recovery in the luxury
segment; (ii) suburban malls in high-tier cities with strong population influx; (iii) malls with first-
mover advantage in low-tier cities; and (iv) malls with strong management teams. We expect
CR Land and Joy City to benefit more from the recovery in retail sales, given a high proportion
of turnover rents. Both companies could also potentially benefit from the establishment of
C-REITs to quicken their asset turnover and expand their national footprint. In the US, the
largest REIT in terms of market cap is Simon Property, which focuses on retail malls.
Luxury hotels Hotels have been the least favourable assets among commercial properties, due to their low
profitability and oversupply concerns. But we are positive on luxury hotels in Tier-1 cities,
as (i) the trading up by consumers has already driven up occupancy, and will eventually
reverse the downward trend in room rates; (ii) EBITDA will likely see a larger rebound, given
a high operating leverage; and (iii) hotel supply has slowed substantially over the past two
years. In addition, judging from the experience of hotels in the US which also suffered from
oversupply in the early 1990s, we believe there will be a gradual recovery in profitability
after the supply of new assets slows down. Coupled with the emergence of modern equity
REITs, this has resulted in mounting acquisition activity by REITs and a larger number of
hotel rooms being controlled by fewer players. This has also led to a continuous increase
in revenue per room (RevPAR), except during the two ’Black Swan’ periods (9/11 and the
housing/banking crisis). Hotels in China will likely follow suit.
Mature hotels in prime locations in top-tier cities should benefit more. Jinmao Hotel, owning
eight luxury hotels in key Tier-1 cities and tourist hotspots, should ride on the recovery of
the hotel business. Guangzhou R&F currently owns 18 luxury hotels in key Tier -1 and -2
cities and is acquiring 77 hotels from Wanda. We think it could be a potential beneficiary.
To sum up, we expect three categories to potentially benefit from the upcoming C-REITs:
1. Developers with businesses encouraged by the government – public-private partnership
(PPP) projects, long-term rental apartments, and senior housing – as these areas would
be the first to see a breakthrough in C-REITs.
2. Developers with a high proportion of hotels and investment properties.
3. Companies with property funds, such as Vanke, Sino-Ocean, and Joy City. Their
property funds are existing structures which might be more easily converted to C-REITs
in the future.
A recent spate of policies has led us to believe that the
establishment of the long-awaited C-REIT is imminentDBS Asian Insights
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China REITs Are Lagging
R
EITs were separated from the GICS (Global Industry Classification Standard) financial
sector as a sector on their own, indicating the importance of REIT products globally.
This also raises the question about the time frame for the development of C-REITs,
given that China is now the world’s second-largest economy as well as the second-
largest market for commercial real estate transactions (according to JLL), with Shanghai
ranked the top city for real estate investment in Asia-Pacific in 2016.
So far, China has no real equity REIT or any investment trust commonly acknowledged as
one domestically. However, neighbouring countries/regions have experienced tremendous
growth in the past decade. Japan introduced its first REIT in 2000 and has since then
launched more than 50 REITs, with an aggregate market cap of US$106bn, making up
2.1% of its 2016 GDP. REITs’ market cap as a percentage of 2016 GDP averaged 6% in
key Asia-Pacific countries. Even if we conservatively assume a 1% figure for China, its REIT
market cap could potentially be US$115bn. India kicked off its infrastructure REIT sector in
2014, leaving China the last big economy that has yet to have such investment vehicles.
Diagram 1. REIT markets in Asia and the US
Country The year No. of Mkt cap Mkt cap 2016
/ region the first REITs as of all of REITs GDP
REIT was of Sep REITs as % (US$
launched 2017 (US$ bn) of 2016 bn)
GDP
US 1960s 190 998.7 5.38% 18,569
Australia 1971 53 93.7 7.78% 1,205
Malaysia 1980 18 10.2 3.44% 296
Japan 2000 58 105.5 2.14% 4,939
Korea 2001 6 1.6 0.11% 1,411
Singapore 2002 41 60.6 20.40% 297
Hong Kong 2003 13 34.8 10.85% 321
Taiwan 2003 5 2.1 0.39% 531
Thailand 2003 63 12.5 3.08% 407
(1) inclusive of Property Funds for Public Offerings (“PFPOs”)
Source: NAREIT, Bloomberg Finance L.P., DBS Bank, CEICDBS Asian Insights
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Limited progress The development of C-REITs can be traced back to 2005, when the first offshore REIT-
Yuexiu REIT was launched on the Hong Kong Stock Exchange (HKEx). Yuexiu REIT’s structure
was relatively simple, with four British Virgin Islands (BVI) companies holding the four
domestic buildings, respectively. The four BVIs were fully owned by a holding company
(holdco) which is the REIT platform. However, the government subsequently announced
a new regulation on the entry and administration of foreign investments in the real estate
market, which banned offshore holding companies from holding domestic properties
directly. The government also raised the requirement for the registered capital of foreign-
invested onshore real estate companies, making it more difficult for offshore C-REITs. As a
result, CR Land and Wanda had to abandon their plans to follow in Yuexiu REIT’s footsteps.
CapitaRetail China was the first offshore China REIT under the new regulation. Compared
to Yuexiu REIT, CapitaRetail China needs to form one onshore holding company, adding
additional operation costs and audit expenses. In terms of taxes, Yuexiu REIT is only
subjected to 10% withholding tax (on revenue) for the four projects in its initial portfolio,
while CapitaRetail China has to bear 25% corporate income tax.
Diagram 2. Milestones of China’s REITs
Year Event
2003 Trust financing started becoming an important source of funding for developers
2005 The first offshore REIT, Yuexiu REIT, listed on HKEx
Banking regulator raised threshold for the issuance of REITs
Onshore ABS kicked off
2006 Regulation on the entry and administration of foreign investments in the real estate market
CapitaRetail China Trust listed on SGX
2007 RREEF China Commercial Trust listed on HKEx
2008 PBOC encouraged the initiatives in the financial sector and planned to launch REITs
Insurance companies were allowed to invest in real estate
2009 PBOC worked out a pilot programme for REITs in Beijing, Shanghai, and Tianjin
2011 The first RMB REIT, Huixian REIT, listed on HKEx
Perennial China Retail Trust listed on SGX
Penghua US REIT was listed
2013 NC REIT and Spring REIT listed on HKEx
Mapletree Greater China listed on SGX
2014 Regulator promoted the pilot programme for REIT products
Two onshore debt-like REITs, CITIC Qihang and CITIC Suning, kicked off
Jinmao Investment (renamed Jinmao Hotel) was listed on HKEx
RMBS kicked off
2015 More onshore debt-like REITs issued
The first onshore quasi-REIT, Penghua Vanke Qianhai, was listed
BHG Retail REIT listed on SGX
A number of developers issued various ABS products
HPF RMBS kicked off
2016 Insurance companies were allowed to invest in ABS products
EC World REIT listed on SGX
CMBS kicked off
2017 Dasin Retail Trust listed on SGX
Pre-REIT asset-backed note (ABN) on the interbank market
Golden Eagle issued the first CMBN
The first long-term rental apartment pre-REIT (with Equity element) issued
Source: DBS BankDBS Asian Insights
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Edging Towards Onshore REITs
CITIC Qihang as a The regulator had also made some progress towards fostering an onshore REIT platform,
milestone albeit at a slow pace, until 2014, when it gradually relaxed the approval process for domestic
asset-backed securities (ABS) and encouraged the pilot programme for REIT products. The
successful issuance of CITIC Qihang in May 2014 was a milestone for onshore C-REITs,
although it is not a “real” REIT like the ones in other countries and it is under a private fund
structure as constrained by Law on Securities Investment Fund (證券投資基金法). Onshore
residential mortgage-backed securities (RMBS) also kicked off in 2014. Subsequently,
onshore REITs (or pre-REIT/quasi-REIT, as we call them), RMBS and other ABS enjoyed rapid
growth in 2015. In 2016, ABS and RMBS (including housing provident fund RMBS or HPF
RMBS) continued their growth, with the emergence of commercial mortgage-backed
securities (CMBS) or commercial mortgage-backed notes (CMBN).
Diagram 3. Onshore development of ABS, REITs, CMBS, RMBS, and HPF CMBS
Overall ABS Pre-REIT CMBS RMBS HPF RMBS
Rmb bn no. Rmb bn no. Rmb bn no. Rmb bn no. Rmb bn no.
2011 1 1
2012 22 7
2013 23 14
2014 322 94 10 2 7 1
2015 610 317 13 4 26 8 10 9
2016 905 509 13 8 21 4 105 15 39 9
11M17 1,559 744 25 13 45 14 171 19 0 0
Source: CNABS, DBS Bank
Categories of Onshore REIT-like Products
Pre-REITs Constrained by regulations, the prototype onshore REITs are not similar to traditional
equity REITs and there are vague classifications or various definitions of onshore REITs. We
classify these REIT-like products into two categories –Quasi-REIT (類REIT) and Pre-REIT (准
REIT). An example of a quasi-REIT is Penghua Vanke Qianhai, which is a publicly-traded
fund half invested in Vanke’s rental property in Qianhai (RMB 1.27bn) and the other half
(RMB 1.73bn) invested in fixed-income securities. The Vanke Qianhai office is owned by the
local government and managed by Vanke. Therefore, Penghua Vanke Qianhai looks like a
combination of income rights ABS (收益權ABS) and fixed-income securities.
The 27 widely-discussed REIT-like products are classified as pre-REITs, as they are all under
a private fund structure and hold certain commercial properties. They are expected to be
converted into real REITs in the future following the relaxation of regulations. Such productsDBS Asian Insights
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are similar to Taiwan’s real estate asset trusts (REATs), which are slightly different from REITs,
given the limited number of assets in the portfolio and no capability to acquire new assets.
Also, there is no need to actively manage assets in the portfolio. Most pre-REITs are tradable
in the Shanghai or Shenzhen stock market, despite being regulated by the China Securities
Regulatory Commission and having limited liquidity.
These pre-REITs are all debt-like vehicles and barely resemble an equity-REIT familiar
to investors, as the government aims to manage the risks of such products at the initial
stage and believes a debt structure is more secure than an equity one. Given the debt-like
structure, such products also extended into the interbank market. The first asset-backed
note (ABN) with property being the underlying asset is Industrial Wanxin Media (興業皖新
閱嘉). It is regulated by the People’s Bank of China (PBOC).
Diagram 4. Types of Chinese REITs and other securitisation
Category Market Structure Examples
Offshore China Hong Kong Listed REITs / BTs Yuexiu REIT, Huixian REIT, New Century REIT, Spring
REITs (business trusts) on REIT, Jinmao Hotel (BT)
HKEx
Singapore Listed REITs / BT on Mapletree Greater China, CapitaRetail China Trust,
SGX BHG Retail REIT, EC World REIT, Dasin Retail Trust
Onshore China Shenzhen stock Quasi-REITs − mutual Penghua Vanke Qianhai (鵬華前海万科)
REITs exchange fund structure with
full rights to the
rental of certain
commercial properties
Shanghai / Pre-REITs − private CITIC Qihang (中信啟航), CITIC Suning (中信華夏蘇寧雲
Shenzhen stock fund structure 創/雲享), Hengtai HNA SPDB (恒泰浩睿海航浦發), CM
exchange holding certain Chuangrong Rainbow (招商創融天虹商場), Hengtai
commercial Caiyun Hotel (恒泰浩睿彩雲之南), TF AVIC Redstar (
properties, with 天風中航紅星愛琴海), Oriental Injoy Plaza (東證資管
expectation of being 青浦吾悅廣場), EBP Capital Imix Park (首譽光控安石大
transformed into real 融城), CITIC SanPower Nanjing IFC (中信華夏三胞南京
REITs in the future 國際金融中心), CITIC Wanxin Yuejia (中信皖新閱嘉),
after the relaxation of Changjiang Chuyue Zhongbai (長江楚越中百), Pingan
regulations Suning Plaza (平安蘇寧廣場 ), TF Everbright Elion (天
風光大億利生態廣場), Hengtai Hongze HNA (恒泰弘澤
廣州海航雙塔 ), BOC Inv CMS Kaiheng (中銀招商北京
凱恒塔樓 ), Kaiyuan HNA (開源北京海航實業大厦), CM
Chuangrong Fusheng (招商創融福晟), First Qianhai
Fund LerThai (中聯前海開源勒泰一號), GoHigh Red Star
(暢星高和紅星), Bohai Huijin Yuefang ID mall (渤海匯金
中信資本悅方ID mall), Bohai Huijin CYPA (渤海匯金新派
公寓權益型)DBS Asian Insights
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Diagram 4. Types of Chinese REITs and other securitisation cont.
Interotc* Pre-REIT, not publicly Hengtai Hongze Yindu (恒泰弘澤華遠盈都商業), CITIC
traded Goldstone Country Garden (中信金石碧桂園鳳凰飯店)
Interbank Pre-REITs, ABN (asset- Industrial Wanxin Media (興業皖新閱嘉)
backed note)
Onshore CMBS/ Shanghai / Publicly traded Go High CM Chemsunny (高和招商金茂凱晨), Hengtai
CMBN Shenzhen stock CMBS (commercial Yintai Centre (北京銀泰中心), Sinolink Sinar Mas Arch (
exchange mortgage-backed 國金金光金虹橋國際中心 ), Shenzhen YT Holiday Plaza
security) (深圳益田假日廣場), Huifu JIC SOHO Fuxing Plaza (匯
富建投匯宇搜候復興廣場), TF China Central Place SKP
(天風華貿SKP), Financial Street (金融街), HTAM Poly
Property (華泰資管保利置業), CITIC Poly RE (中信保利地
產), Hongbo (紅博會展), CICC SCPG SCP Plaza (中金印力
深國投廣場), Pingan Winbond Intime (平銀國君華邦銀
泰城), Harvest Capital Zhongjieneng (嘉實資本中節能綠
色建築), GoHigh Tebon Forte (高和德邦複地商業物業)
Interotc* CMBS, not publicly Minsheng FuWah Jinbao (匯富富華金寶大厦)
traded
Interbank CMBN (commercial Shimao Int'l ABN (世茂國際ABN), Golden Eagle ABN (
mortgage-backed 金鷹ABN), Future Land ABN (新城控股ABN)
note)
Other Shanghai / Various types of So far, there are 18 HPF RMBS, 43 RMBS listed, and
securitisation Shenzhen stock ABS (asset-backed a number of developers have issued various ABS
exchange security) on property products
management fee or
receivables, as well
as RMBS (residential
mortgage-backed
security) and HPF
(housing provident
fund) RMBS
* The quotation and service system of private products for institutions (機构間私募產品報價與服務系統)
Source: DBS Bank
Structure of Onshore Pre-REITs
Currently, pre-REITs have quite a complicated structure, in order to save/avoid taxes under
the existing tax regime.
Firstly, target properties (標的物業) are usually held by project companies, with the aim
of reducing land appreciation tax and deed tax during asset transactions. So far, there has
been one exception – CM Chuangrong Rainbow (招商創融天虹商場). The target property
- 天虹商場 - was directly held by an asset-backed programme (資產支持專項計畫), but has
been facing various taxation problems.DBS Asian Insights
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Secondly, a SPV is needed to hold both the equity and debt of project companies. The
equity-plus-debt structure is to reduce income taxes and enhance return/yield, as interest
on debt is tax-deductible. Therefore, most underlying assets (底層資產) of pre-REITs are
equity-plus-entrusted loans of project companies. Two exceptions are CITIC Qihang (中信
啟航) and CITIC Suning Yunxiang/Logistics (中信華夏蘇寧雲享). Both only own equity of
project companies.
Private equity Thirdly, there is the private equity or PE fund (契約型私募基金) holding the abovementioned
fund SPV(s). The purpose is to set up a platform which could be easily transferred into a public REIT
after policy relaxation in the future. In addition, the structure enables potential introduction
of professional real estate investors as PE fund managers for managing operations of the
target properties.
On top of PE funds, there usually is another SPV (trust or asset-backed programme), which
is designed for securitisation.
Diagram 5. Typical structure of onshore pre-REITs
Required return
3.8-5.8% 4.3-7.0% no guaranteed return
Domestic rating
AAA AAA, AA+, AA normally no rating
Senior tranche A Senior tranche B Subordinated tranche
(more ilke bonds/CMBS) (more like bonds/CMBS) (more like equity)
SPV
(trust or asset-backed
programme)
The reasons for the PE fund structure are:
(i) For potential transfer into public REITs
Private equity fund and (ii) for potential introduction of a
(契約型私募基金) professional real estate investor as PE
fund manager in the future.
The equity + debt structure
SPV
is to reduce income tax,
100% equity Interest as interest on debt is tax-
and debt on debt + deductible.
income on
equity
Project companies
Compared to an asset transfer,
a share transfer of a project
company could reduce land
Target property
Source: DBS Bank appreciation tax and deed tax.
(標的物業)DBS Asian Insights
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There are 2-3 tranches of end securities for each pre-REIT, including 1-2 senior tranches
and 1 subordinated tranche (some may not have subordinated tranche). Senior tranches
resemble bonds or CMBS and require high credit (onshore) ratings as well as fixed returns,
while subordinated tranches (usually fully or mostly owned by originator) look like equity
and usually no credit rating or guaranteed return is needed.
While most pre-REITs are debt-like instruments, some have equity elements built in the
subordinated tranches. We are also seeing pre-REITs gradually evolving toward equity-REITs.
The first pre-REIT for rental housing, Bohai Huijin CYPA (渤海匯金新派公寓), was issued on
3 November 2017. Investors could also invest in its equity tranche and are entitled to 80%
of asset appreciation when they exit. The key characters of pre-REITs with equity elements
are summarised in the table below. Investors of those subordinated tranches usually enjoy
asset appreciation. Poly CN plans to issue the first batch of its rental housing pre-REIT (保利
地產租賃住房一號), with an initial size of RMB 1.7bn. Different from other pre-REITs, this
product is scalable in the future, with a potential size of up to RMB 5bn.
Diagram 6. Some pre-REITs have equity elements
Pre-REITs with equity Other pre-REITs
elements
Structure Senior + subordinated (or 2-3 senior tranches
equity) tranche
Rating High rating for senior High rating for senior
tranche, but no rating for tranches
subordinated tranche
Tenure Usually 3-5 years Usually 18-24 years, with
interest-rate adjustment or
call/put option every 3 years
Investors Previous asset owner Senior tranche investors
usually subscribes to all or won't enjoy asset
part of subordinated (or appreciation
equity) tranche; investors of
the subordinated (or equity)
tranche may enjoy asset
appreciation
Examples CITIC Qihang (中信啟航), Others
CITIC Suning Yunxiang (
中信華夏蘇寧雲享), CM
Chuangrong Rainbow (招商
創融天虹商場 ), Bohai Huijin
CYPA (渤海匯金新派公寓)
Source: DBS BankDBS Asian Insights
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Diagram 7. Typical structure of offshore equity REITs
Sponsor Unitholders
Cash distributions
Equity stake
REIT manager Service REIT Service Trustee
Fees Fees
Loan
/bo
Ownership
NPI Inter nd
est
Property Service Real estate Debt
manager assets (lenders)
Fees
Source: DBS Bank
Risk/Return Profile of Onshore Pre-REITs
Falling interest As abovementioned, the government aims to manage the risks of such products at the
rates initial stage and believes that a debt structure is more secure than an equity structure. In
fact, those pilot debt-like products appear to be riskier, as gross gearing ratios (if treating
senior parts as debt and subordinated parts as equity) ranges from 50-70%, compared to
a cap of 45% as required by REIT codes in Asian countries. The coupon rate or interest rate
of those products has gradually fallen from 7% at early-2014 to 5% lately, compared to an average yield of 6-9% for offshore C-REITs listed
in Hong Kong/Singapore. This has made such products less attractive to investors who want
to climb up the risk curve to generate higher returns. Also, those pre-REITs are all held by
private funds, with fewer than 200 investors in total, pointing to limited liquidity. Moreover,
offshore C-REITs are usually issued at a price below NAV, providing a cushion in the case
of any decline in asset value; onshore pre-REITs are usually issued on par with valuation,
leading to potential risks if assets devalue.
Other problems faced by onshore pre-REITs include:
1. The domestic system of credit ratings is confusing and remains a black-box to most
investors, especially offshore investors. For example, the underlying assets of Hengtai
Caiyun Hotel (恒泰浩睿彩雲之南) are two five-star hotels in Beijing and Yunnan, but
they generate a negative cashflow. Yet, three tranches of the product were initially ratedDBS Asian Insights
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AAA/AA+/AA+, respectively, and were upgraded to AAA/AAA/AAA one year later. The
upgrade was mainly due to credit enhancement from the originator which is a local SOE
in Yunnan. Normally, a high-quality portfolio would have higher credit rating and attract
cheaper capital. Offshore REITs usually have higher or equivalent credit ratings than
those originators/parentcos, while onshore pre-REITs usually need credit enhancement
from originators/parentcos.
2. Interest coverage ratios for some products are close to 1x. CM Chuangrong Rainbow (
招商創融天虹商場)’s cash flow in 2015 was only 1.03x of annual coupon payments.
3. Some products have only a single underlying asset or underlying assets that serve a
single end-customer. Half of those pre-REITs have only one underlying asset, which
may expose investors to concentration risks. For example, the CITIC Suning series (中
信蘇寧系列) has multiple underlying assets, but those assets are serving only one end-
customer, which is Suning.
4. The valuation methodology of onshore valuers are unknown to investors. Domestic
valuers look more aggressive than international valuers. For example, China Jinmao’s
Beijng Chemsunny World in Beijing was valued at RMB 12.9bn when issuing CMBS,
compared to its book value of RMB 8.3bn. CITIC Qihang (中信啟航) bought back the
first pre-REIT in mid-2016. Subordinate (or equity) tranche investors were supposed to
enjoy 90% of asset appreciation when exiting, but failed to enjoy such returns, as the
manager of the asset-backed plan changed its valuer in 2016 and recorded an asset
depreciation in 2016, which is contrary to market reality.
5. There is limited information on pre-REITs, as current pre-REITs are based on the private
equity platform and information is only disclosed to selected investors.
6. Domestic brokers are striving to design a better structure under the current legislative
and taxation regime but there is no standardised structure for these pre-REIT products.
This makes transacting these products more difficult as it takes time for investors to
study the structure case by case.
Key Differences Between Onshore Pre-REITs and Offshore REITs
In terms of structure, most onshore pre-REITs are under private funds with a multiple-tranche
debt structure. As mentioned, only a couple of them have an equity element with the equity
tranche enjoying/entitled to asset appreciation or can be converted to shares of a public REIT if
the product is listed in the future. Pre-REITs are tradable on the Shanghai and Shenzhen stock
markets or interbank market. Offshore C-REITs are all equity REITs listed on stock markets.
In terms of credit rating, onshore REITs usually need credit enhancements from their
parentcos or originators, while offshore REITs usually have an equal or higher credit ratingDBS Asian Insights
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than their parentcos or originators.
Yet, offshore C-REITs usually face currency-mismatch problems, while onshore pre-REITs
bear no foreign exchange risks, which could lead to lower costs of capital.
Diagram 8. Key differences between onshore pre-REITs and offshore REITs
Onshore pre-REIT Offshore China REIT
Structure
Platform Private fund Corporates or trusts, publicly traded
Assets transferred to Yes Yes
platform
Underlying assets Usually equity + debt of target properties Equity
Target properties Office, mall, hotel, warehouse, rental Office, mall, hotel, serviced apartment, warehouse
housing
Transparency Limited public information Public announcement
Operation Passively managed Actively managed
Scalability No capability to acquire new assets Can acquire new assets as long as gearing is below
cap
Tenure 3-5 years Nil
Exit Limited liquidity; normally need to wait Dispose on the stock market
for expiry, public listing, buyback from
originators and selldown to third parties,
senior tranche could also exit via CMBS
Market Stock market and interbank market Stock market
Risk profile
Rating agencies Domestic rating agencies Foreign rating agencies
Credit enhancement A pre-REIT usually needs credit No such need as the REIT usually has an equal or
enhancement from originator/parentco higher rating than that of its originator/parentco
Underlying asset Some own a single asset or multiple Multiple assets with multiple tenants
assets servicing a single end-customer
Leverage (gross gearing) 50-70% 20-40%
Currency risk No Yes
Return profile
Capital gain Subordinated tranche may enjoy capital All shareholders enjoy capital gain
gain, but normally owned by previous
asset owners or originators
Interest / dividend Fixed coupon rate Depending on cashflow
Yield / coupon AAA: 4-6% 6-9%
AA+: 5-7%
AA: 6-7%
Source: DBS BankDBS Asian Insights
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Major Obstacles in Fostering
an Onshore REIT Regime
T
he first obstacle is the lack of a suitable platform to hold assets, as constrained by
regulations.
Absence of a specific One obstacle is the specification that a public-traded fund platform is not
REIT code allowed to hold underlying assets. According to existing laws/regulations (Law of PRC on
Partnerships 合夥企業法, Trust Law 信託法, Law on Securities Investment Fund 證券投資
基金法), publicly traded funds are not allowed to hold commercial properties, which is why
existing onshore pre-REITs are set up as private funds. This could lead to liquidity concerns
as the number of investors under a private fund structure is capped at 200.
Diagram 9. 33 countries/regions have drafted REIT codes so far
Bahrain
Philippines India
Mexico Kenya
Germany
UK South Africa
Dubai Ireland
Israel
Pakistan
Malaysia Hungary
Hong Kong
Taiwan
Bulgaria
Singapore France Spain
Belgium Finland
Turkey
Russia
Australia Italy Korea
Netherlands Brazil Japan
US New Zealand Canada
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Source: NAREIT, DTZ, DBS BankDBS Asian Insights
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Following in Hong In our view, this obstacle should be easy for the government to remove. A specific REIT code
Kong’s and India’s is required to foster an ecosystem for REITs.
footsteps
In 2003, the Hong Kong Housing Authority had planned to fund welfare housing via REITs,
and Link REIT listed on HKEx in late-2005. Subsequently, the REIT platform was expanded
to include non-government sponsors. In 2014, India also kicked off its first REIT to fund
infrastructure projects. This is targeted to open new investment avenues to private capital
as well as foreign investors.
In our view, China could follow Hong Kong and India in kickstarting the REIT code for the
first REIT to fund welfare/infrastructure projects. This could alleviate local governments’
burden and their reliance on bonds, and the established REIT code could gradually expand
from the public sector to the private sector.
Another obstacle is the current tax regime in China, which leads to multiple levels of taxation
for C-REITs.
Multiple levels of When injecting projects or project companies into the REIT platform, there will be transaction
taxation currently taxes such as stamp duty tax, deed tax, value-added tax (VAT), appreciation tax (LAT), and
income tax, although some taxes might be negotiable with local governments. Yet, project
companies with offshore structures are not subject to transaction taxes, and therefore,
they could save on tax expenses when setting up an offshore REIT platform; an example is
Jinmao Hotel. The holding of assets is also subject to property tax, VAT (previously business/
sales tax), and income tax, which will dampen yields.
Tax “conduit” by Being a “mutual fund” investing in commercial properties instead of listcos, REITs see most
nature of their income go to investors after deducting management fees. Therefore, a REIT can be
seen as a tax “conduit” and is exempt from corporate income tax. A pass-through income
tax structure when injecting assets into a REIT platform is also needed to attract interest.
However, different countries have different tax regimes, and it may not be easy to come up
with a clear-cut solution.
In the US and major European countries such as Germany, France, and the UK, REITs usually
enjoy tax benefits and are exempt from capital gains tax for asset transfers as well as
corporate income tax. This is attractive to investors and makes the REITs’ pricing-correction
role more effective. Asian countries are generally cautious on REIT taxation. The Singapore
government has been quite supportive of REITs, and S-REITs are exempt from any transaction
tax as well as income tax on profits to be distributed. As a result, the S-REIT sector has
grown at the fastest pace in Asia. By comparison, HK REITs are subjected to stamp duty tax
for asset transfers. HK REITs are also subjected to income tax, given the absence of taxation
on dividends. Thus, HK REITs are less attractive than S-REITs; the development of HK REITs
has been lagging that of S-REITs’.DBS Asian Insights
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Balancing the central In China, most taxes related to asset transfers and commercial property operations are
government’s and local local taxes. Therefore, the central government has an incentive to remove these taxes to
governments’ interests develop the REIT sector, but there could be resistance from local governments. The situation
is becoming even more complicated after the VAT reform (from business tax to VAT), as tax
revenue collection continues to be in the hands of the central government, which further
weakens local governments’ taxation capability. As a result, local governments have started
to strengthen the levy of remaining local taxes lately. The central government has unified its
property tax from either 0.84% of the cost of buildings or 12% of rental income previously
to 12% of rental income, which has had a large impact on old buildings in premium
locations as they carry relatively low costs but high rent.
Diagram 10. Taxes related to commercial property transactions/operations in China
Tax Central or local tax Tax base Tax rate
(國稅 or 地稅)
Taxes related to asset transfers
Stamp duty Local Transaction price 0.05%
Deed tax Local Transaction price 3%
Value-added tax Central Depends on price and 11%
cost
Land appreciation tax Local Depends on price and 30-60%
cost
Income tax Mainly local tax; central Profit before tax 25%
SOEs’ and financial
institutions' income tax is
central tax
Taxes related to commercial property operations
Property tax Local Original cost / rental 0.84% / 12%
income
Value-added tax Central Revenue - deductible Hotel/industrial: 6%
items
Office/retail: 11%
Income tax Mainly local tax; central Profit before tax 25%
SOEs’ and financial
institutions' income tax is
central tax
Source: DBS BankDBS Asian Insights
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Tax waivers necessary Based on our study, the land appreciation tax (LAT) for project transfers or income tax
for transfers of project companies are major considerations for landlords that want to
inject their properties into a REIT structure. Local governments may need to change their
mind-set as removing one-time transaction taxes could help digest idle assets in cities and
enhance taxes from operations of those idle assets. Again, welfare/infrastructure projects
could be a good start to enjoy tax benefits while alleviating local fiscal burdens.
A pass-through income A pass-through income tax structure may not be easy to implement in the short term,
tax structure? given the absence of capital gains tax and dividend tax (nil for onshore incorporated
companies, 10% withholding tax for offshore companies; for individual investors:
20%/10%/nil if holding shares 12 months). But, we think
there could be some tax benefits in some pilot cities like Beijing, Shanghai, and Tianjin. For
example, CITIC Qihang (中信啟航) has two SPVs in Tianjin holding two buildings in Beijing
and Shenzhen, respectively. Property tax and VAT will be taxed in Beijing and Shenzhen,
respectively, while income tax will be at 18% in Tianjin (versus the normal level of 25%).
Also, welfare/infrastructure projects could be packaged as pilot programmes to enjoy tax
benefits. The central government has just drafted regulations on housing lease and sales
management (住房租賃和銷售管理條例), proposing to extend tax incentives to housing
lease operators. This could be easily extended into welfare/infrastructure projects.
Having said that, taxation, in our view, is more a factor determining the market size of
C-REITs, rather than an obstacle preventing the establishment of C-REITs, as offshore
C-REITs also need to pay various taxes in China. So far, only Yuexiu REIT’s initial batch of
four assets in Guangzhou and Spring REIT’s office in Beijing are directly owned by offshore
SPVs/funds before the new regulation in 2006, and subject to 10% withholding tax on
revenue; the rest of the assets under offshore C-REITs are subject to 25% income tax. All
China assets owned by offshore C-REITs are subject to property tax and VAT.
Current tax-saving As discussed previously, there are several techniques used by pre-REITs to avoid some
measures taxes.
For asset transfers, transactions of project companies instead of a direct asset transfer are
generally implemented to avoid LAT and deed tax. Domestic securities companies are also
working on the design of the pre-REITs’ structure to further reduce taxes incurred during
asset transfers.
To reduce income taxes for target properties’ operation, a SPV is structured to hold both
equity and debt of project companies. Most underlying assets of pre-REITs are equity plus
entrusted loans of project companies.DBS Asian Insights
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Diagram 11. Simplified structure of Yuexiu REIT Diagram 12. Simplified structure of Spring REIT
Yuexiu REIT Spring REIT
GZI REIT 2005 RCA01 RUK01
Co. Ltd.
Four offshore Offshore
SPV/BVIs SPV/BVIs UK properties
Offshore Offshore
Onshore Onshore
Onshore project
companies
Four initial Four assets Initial assets
assets acquired in Beijing
Diagram 13. Typical structure for offshore C-REITs
Offshore China
REITs
Offshore SPVs
Offshore
Onshore
Onshore project
companies
RE assets
in China
Sources: Company, DBS BankDBS Asian Insights
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CMBS/CMBNs Are Growing Faster
Bigger potential in the CMBS is a type of mortgage-backed security with commercial properties being the
near term underlying asset. Compared to pre-REITs, the big difference is there is no asset transfer
– avoiding the two key obstacles faced by onshore REITs. Compared to traditional bank
loans, CMBS enjoy lower funding costs and better liquidity. Compared to other property-
related ABS (such as property management ABS or receivables ABS), the underlying assets
of CMBS are commercial properties that generate rental income from institutions, which
are more stable and predictable than other underlying assets.
The first public-traded CMBS – Go High CM Chemsunny (高和招商金茂凱晨) kicked off
in August 2016, although some say that Hengtai Yintai Centre (北京銀泰中心) was the
first one. The missing element of Hengtai Yintai Centre is an individual servicer to manage
assets and isolate risks, while Go High CM Chemsunny has a joint venture between Go
High Fund and China Jinmao as an individual servicer. Originators – China Jinmao and
China Yintai – have subscribed for all the subordinated tranche of both CMBS. This is
slightly different from CMBS in US, where the subordinated tranche is usually purchased
by servicers.
Diagram 14. Key differences between CMBS and other property-related ABS
CMBS Other property-related ABS
Underlying asset Commercial property Various debt, residential mortgages,
property management fees, and
receivables
Cash source Rental income Debtors' repayment
Underlying credit Tenants' credit (mainly Debtors' credit (mainly individuals)
institutions)
Source: DBS Bank
So far, we have seen 18 CMBS issued, worth about RMB 66bn, compared to 27 existing
pre-REITs worth RMB 61bn. The average size of CMBS is larger than those of pre-REITs.
The reason for this is CMBS could be seen as a substitute for investment loans (經營
貸) on those commercial properties and needs more scale to enjoy greater cost savings.
The US had witnessed tremendous growth during 1995-2007. After the Global Financial
Crisis, the annual issuance of CMBS has recovered to the level of US$80-100bn. Given
the simplicity of the structure, CMBS may have better growth prospects than onshore pre-
REITs in the near term. However, the pace of development may be controlled by regulators.
As we learnt, a number of potential CMBS are in the pipeline, awaiting approval from the
stock exchange. Shimao and Golden Eagle recently issued CMBN products on the inter-
bank market.DBS Asian Insights
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Diagram 15. Issuance of CMBS in the US
Source: Commercial Mortgage Alert, JLL, DBS Bank
C-REITs Are Imminent
Residential properties’ Currently, Chinese residents prefer to put their money directly into property assets, given
attractiveness as the lack of REIT products and limited investments channels. Housing prices used to jump
investments every three years (policy cycle). In addition, direct ownership usually enables substantial
leverage (20-30% down payment when policy loosens). Leverage is a powerful tool, which
could amplify the return on investment on residential properties. Local governments have
implemented a series of policies (including purchase/sell/mortgage limitations) with the
intention of managing residents’ expectations on housing prices. In addition, this should
greatly weaken the liquidity of residential properties. Normally, price expectations should
be negatively affected by tightening leverage and liquidity.
The government has attached more importance to long-lease rental apartments, proposing
to give more incentives (including land supply and tax incentives) to this area. However,
during the 19th CPC National Congress, the government reiterated that housing is for
accommodation, not for speculation. Therefore, we expect housing prices to be more
stable than before.
Commercial properties’ The regulators have been speeding up the drafting of the REIT code lately. In addition,
function as investments the central government has been iterating the pilot programme for REIT products. The
first pre-REIT for long-lease rental apartments was issued on 3 November 2017, and some
industry experts are expecting the breakthrough in onshore REITs to come from this segment.DBS Asian Insights
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Moreover, the issuance of onshore pre-REITs has also accelerated lately. As such, we think
C-REITs are imminent, although the initial structure might not resemble that of international
REITs’, as the industry is constrained by existing legislation and taxation. As abovementioned,
upcoming C-REITs could be public funds with investment targets of onshore pre-REITs. Yet,
they should greatly improve the liquidity of commercial properties and unlock value.
Commercial property to Rising risks in the residential sector after the rapid increase in land prices and the Chinese
outperform residential government’s latest cooling measures have led investors to switch their focus from residential
property to commercial properties, on expectations that this class will offer stable yields with potential
for asset appreciation. In fact, several developers are building their commercial property
portfolio in top-tier cities. Based on our observations, the capital value of commercial
properties in Japan and Hong Kong have outperformed residential housing prices after the
introduction of local REITs.
Diagram 16. Initial onshore REITs structure
Mutual fund
(公募基金 )
Pre-REITs Pre-REITs
Target property Target property
(標的物業 ) (標的物業 )
Source: DBS Bank
Diagram 17. Commercial land prices have outperformed residential land prices in
Japan since 2000
Source: CEIC, DBS BankDBS Asian Insights
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Diagram 18. Office/retail prices have outperformed residential prices in Hong Kong,
especially after 2005
Source: DBS Bank
In our view, the required yield of C-REITs will likely fall in the 5.5-6.0% range, compared
to the current China 10Y government bond yield of 3.9%, the latest weighted-average
rate of 4.5% for wealth management products (WMP), office/retail assets’ investment
yield of 5.6-6.3% in Beijing/Shanghai, and current offshore C-REITs’ yield of between
6% and 9%. The yield spread (above China 10Y government bond yield) is likely to be
2%, compared to c.3% for HK REITs and S-REITs, which could be justified by higher asset
appreciation potential in China.
Diagram 19. Differences in returns of banks’ wealth management products and pre-
REITs
Source: CEIC, DBS BankDBS Asian Insights
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Diagram 20. Differences in returns of banks’ wealth management products and pre-
REITs
Source: CEIC, DBS Bank
We compared the weighted average rate of return of banks’ WMPs and the AAA tranche
of existing pre-REITs and found the average difference is 0.86 percentage point. We
also compared the weighted average rate of return of WMPs and the weighted average
coupon rate of existing pre-REITs and found the average difference is 1.47 percentage
points.DBS Asian Insights
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Which Asset Type Will Benefit
More?
T
Asset types here are six Hong Kong-listed REITs holding 31 properties in mainland China,
including 17 hotels, five offices, five retail/wholesale malls, and four commercial
complexes. Eleven S-REITs hold 49 properties in China, including 19 retail malls, 16
logistics properties, 11 hotel/serviced apartments, and one commercial complex.
27 onshore pre-REITs hold a total of 77 properties, including 45 retail malls/chain stores,
10 offices, six logistics properties, and 16 hotels. So far, 18 CMBS/CMBN have been issued
based on 25 investment properties (IPs), including eight commercial complexes, 10 offices,
and seven retail malls. 18 of these IPs are in Tier-1 cities and seven in Tier-2 cities. In addition,
CMBS’ IPs are larger than those of pre-REITs’.
Diagram 21. Asset types owned by onshore pre-REITs Diagram 22. Locations of assets owned by onshore pre-
and offshore REITs REITs and offshore REITs
Sources: Company, DBS BankDBS Asian Insights
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Diagram 23. IPs owned by Hong Kong-listed REITs
Company Stock code Property Type Location
Yuexiu REIT 405 HK White Horse Building Wholesale Guangzhou
Victory Plaza Retail Guangzhou
City Development Plaza Office Guangzhou
Fortune Plaza Office Guangzhou
Neo Metropolis Retail Guangzhou
Guangzhou IFC Complex Guangzhou
Yuexiu Tower Office Shanghai
Wuhan Yuexiu Fortune Centre Complex Wuhan
Huixian REIT 87001 HK Beijing Oriental Plaza Complex Beijing
Chongqing Metropolitan Oriental Plaza Retail Chongqing
Sofitel Shenyang Lido Hotel Shenyang
Harbour Plaza Chongqing Hotel Chongqing
Sheraton Chengdu Lido Hotel Hotel Chengdu
New Century REIT 1275 HK New Century Grand Hotel Hangzhou Hotel Hangzhou
New Century Grand Hotel Songjiang Hotel Shanghai
Shanghai
New Century Hotel Xiaoshan Zhejiang Hotel Hangzhou
New Century Resort Qiandao Lake Hangzhou Hotel Hangzhou
New Century Grand Hotel Ningbo Hotel Ningbo
New Century Grand Hotel Changchun Hotel Changchun
New Century Grand Hotel Kaifeng Hotel Kaifeng
Spring REIT 1426 HK China Central Place T1&2 Office Beijing
Jinmao Hotel 6139 HK Jinmao Tower Complex Shanghai
The Westin Beijing Chaoyang Hotel Beijing
JW Marriott Hotel Shenzhen Hotel Shenzhen
The Ritz-Carlton, Sanya Hotel Sanya
Hilton Sanya Resort and Spa Hotel Sanya
Hyatt Regency Chongming Hotel Chongming
Renaissance Beijing Wangfujing Hotel Hotel Beijing
Grand Hyatt Lijiang Hotel Lijiang
Link REIT 823 HK Ecmall Retail Beijing
Corporate Avenue 1&2 Office Shanghai
Sources: Company, DBS BankDBS Asian Insights
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Diagram 24. IPs owned by S-REITs
Company Stock code Property Type Location
CapitaRetail CRCT SP CapitaMall Xizhimen Retail Beijing
China
CapitaMall Wangjing Retail Beijing
CapitaMall Grand Canyon Retail Beijing
CapitaMall Qibao Retail Shanghai
CapitaMall Saihan Retail Hohhot
CapitaMall Minzhongleyuan Retail Wuhan
CapitaMall Wuhu Retail Wuhu
CapitaMall Anzhen Retail Chengdu
CapitaMall Erqi Retail Zhengzhou
CapitaMall Shuangjing Retail Beijing
Mapletree MAGIC SP Gateway Plaza Office Beijing
Greater China
Sandhill Plaza Office Shanghai
BHG Retail REIT BHGREIT SP Beijing Wanliu Mall Retail Beijing
Chengdu Konggang Mall Retail Chengdu
Dalian Jinsanjiao Property Retail Dalian
Hefei Mengchenglu Mall Retail Hefei
Xining Huayuan Mall Retail Xining
EC World REIT ECWREIT SP Chongxian Port Investment Industrial Hangzhou
Chongxian Port Logistics Industrial Hangzhou
Fu Zhuo Industrial Industrial Hangzhou
The Stage 1 Properties of Bei Gang Logistics Industrial Hangzhou
Fu Heng Warehouse Industrial Hangzhou
Hengde Logistics Industrial Hangzhou
Dasin Retail Trust DASIN SP Xiaolan Metro Mall Retail Foshan
Ocean Metro Mall Retail Foshan
Dasin E-colour Retail FoshanDBS Asian Insights
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Company Stock code Property Type Location
Mapletree MLT SP ISH Waigaoqiao Industrial Shanghai
Logistics Trust
Mapletree AIP Industrial Guangzhou
Wuxi Logistics Park Industrial Wuxi
Xi'an Distribution Centre Industrial Xi'an
Yangshan Bonded Logistics Park Industrial Shanghai
Zhengzhou International Logistics Park Industrial Zhengzhou
Northwest Logistics Park phase 1 Industrial Shanghai
Northwest Logistics Park phase 2 Industrial Shanghai
Ouluo Logistics Centre Industrial Shanghai
Ascott Residence ART SP Ascott Guangzhou Apartment Guangzhou
Trust
Citadines Biyun Shanghai Apartment Shanghai
Citadines Gaoxin Xi'an Apartment Xi'an
Citadines Xinghai Suzhou Apartment Suzhou
Citadines Zhuankou Wuhan Apartment Wuhan
Somerset Grand Central Dalian Apartment Dalian
Somerset Heping Shenyang Apartment Shenyang
Somerset Xuhui Shanghai Apartment Shanghai
Somerset Olympic Tower Property Tianjin Apartment Tianjin
Ascendas ASCHT SP Novotel Beijing Sanyuan Hotel Beijing
Hospitality Trust
Ibis Beijing Sanyuan Hotel Beijing
Cache Logistics CACHE SP Jinshan Chemical Warehouse Industrial Shanghai
Trust
OUE Commercial OUECT SP Lippo Plaza Complex Shanghai
REIT
Sources: Company, DBS BankYou can also read
