As an innovative asset, public REITs have attracted the attention of more institutional investors in the past two years. However, since 2023, the overall secondary market of REITs has declined significantly. Since 2024, CSI REITs (**index** has increased by 388%。
In the primary market, a total of 11 IPOs and expansions will be issued in 2023, raising an amount of 254700 million yuan, of which 7 were first issued, and the amount raised was 2040.6 billion yuan, expanding 4 orders, raising 506.4 billion yuan. Compared with the 14 orders issued in 2022, the amount raised is 4370.5 billion yuan, a decrease of 4172%。
Sun Hui, executive director of Huajin** Asset Management Marketing Department, said in a recent interview with a Chinese reporter from a brokerage firm that public REITs, as a new asset, are gradually growing with the pulse of China's economic development. The public REITs market still needs more policy care to attract incremental funds, especially long-term funds, to the market as soon as possible. For the future public REITs market, investors should still return to the fundamental research of assets on the premise of paying attention to the macroeconomy and overall market liquidity.
The public REITs market should return to fundamental analysis.
Judging from the data, the yields of the world's major REITs markets will all decline in 2023, and the REITs** in Japan, the United States, and Singapore will only be ...8% and 89%, mainly due to the rise in US Treasury yields. Public REITs and Hong Kong REITs were in the bottom two, recording 258% and 295% reduction.
Corresponding to the performance of public REITs in 2023, the CSI REITs Index closed at 74769 points, the whole year **2909%, CSI REITs Total Return Index closed at 85181 points, full year **2357%。
In terms of industries, industrial parks, warehousing and logistics, highways and ecological and environmental protection sectors were among the top decliners, respectively71% and 2480%, the decline in the new energy and affordable housing sectors was relatively low, 1048% and 888%。
Compared with the issue price, 22 REITs will be broken in 2023, mainly in the industrial park and highway sectors. It can be seen that public REITs in 2023 will underperform REITs in the Japanese, US and Singapore markets.
The market data has discouraged many investors. In this regard, Sun Hui believes that while investors pay attention to fluctuations, they should also return to the fundamentals to analyze public REITs, so as to rationally look at market changes.
He said that as the fourth largest type of assets in addition to cash and bonds, the asset attributes of public REITs need to be further studied in China, and although their internal logic has similarities with bonds and bonds, there are also great differences.
Compared with bonds, public REITs do not have a concept of maturity payment, and their cash distribution is also determined according to the operating situation, so when its capital gains are stable and its operation is stable, it is easy for everyone to treat it as a bond, but when the economy and market fluctuate, the difference between public REITs and bonds will be magnified. Sun Hui said.
Sun Hui said: "Compared with **, the biggest advantage of public REITs is that the support of the underlying assets is very strong, after all, there are assets and cash flow support, and the ** changes in these assets and cash flows can also be traced, so the public REITs are characterized as special equity assets, which I think is also very suitable." This not only reflects the support of the underlying assets for public REITs, but also reflects the equity attributes brought about by operational fluctuations. ”
Sun Hui believes that, on the whole, the underlying assets of the projects that have been listed and listed on the network are very high-quality, and they are all mature assets with relatively stable cash flow and a high proportion of dividends. The divergence is the difference in valuation results caused by different valuation assumptions, and this divergence is also one of the reasons for the volatility of the public REITs market in 2023.
Sun Hui believes that REITs** are also interfered by factors such as institutional assessments. In 2023, the fundamentals of some public REITs will perform poorly, and the repair progress will not meet market expectations. Among them, the more prominent is still the high-speed sector, from the perspective of traffic flow and income, the performance of some high-speed REITs is less than expected. This is also a normal fluctuation in the economic cycle, but the length of the cycle spans short-term assessments, which brings certain pressure to institutional investors. In the future, how to formulate an assessment cycle and assessment mechanism for the new asset of public REITs is also an important issue that market participants need to study.
However, Sun Hui said that in the eyes of many institutional investors, the cost-effectiveness of the allocation of such products is gradually emerging. Public REITs have also had a lot of bright spots in the past. For example, in the primary market, in 2023, public REITs will historically complete the first batch of expansion, and the expansion method is directional expansion, and the first batch of expansion shares will be lifted in December. Secondly, the two new energy REITs projects have enriched the product types of public REITs, and also brought a big blue ocean of new energy assets to public REITs.
In addition, the launch of consumer infrastructure REITs has further led public REITs into the commercial real estate sector, providing more exit channels for many assets originally invested in private equity. This means that investors have more opportunities to participate in the investment of high-quality assets, and then look for cost-effective assets to share the dividends brought by the future development of China's economy.
As a new asset, public REITs are gradually growing with the pulse of China's economic development. In the process of growing up, we will face both ups and downs and opportunities. Sun Hui said.
The public REITs market also needs more policy protection.
At present, the secondary public REITs are affected by the market environment, and the liquidity is weak, and the transaction and turnover have been at a low level since October and November 2023, and have recovered since December last year, which is mainly due to the lack of incremental funds. Due to the fear that the secondary volatility of public REITs will continue to fluctuate, investors are waiting to see the market, and relatively few people are really entering the market, and the lack of acceptance of the amount of sales will further exacerbate the liquidity shock.
Therefore, in 2023, the CSI REITs (** Index will continue to break its level, which will be disturbed by factors such as poor expectations of the actual operation of assets and evaluation assumptions, the spread of pessimism, and the lifting of the ban on restricted shares, as well as insufficient market liquidity. "Liquidity shocks and fundamental expectations are mutually reinforcing, and the weakening of expectations exacerbates the liquidity shock, which in turn makes investors more sensitive to expectations." ”
From the perspective of investors participating in the public REITs market, it has gradually changed from the initial three-way world of bank wealth management, brokerage proprietary management and insurance funds to the participation of both brokerage proprietary and insurance funds. Sun Hui said that specific to the recent changes in the market, both the original equity holders to increase their holdings and pay attention to the short-term funds of dividend products, there are also more public offerings of REITs into the scope of its FOF** investment, the Ministry of Finance intends to formally include public REITs into the scope of social security ** investment and other policies to promote the impact of long-term funds into the market.
He said that all kinds of funds are promoting the warming of the secondary market of public REITs from the short, medium and long dimensions, and at present, promoting long-term capital investment in public REITs is not achieved overnight, and at present, it is more about removing the obstacles to capital investment in REITs from the level of rules. Therefore, the public REITs market still needs more policy care to attract incremental funds, especially long-term funds, to the market as soon as possible.
Sun Hui also said that with the further recovery of the macro economy in 2024, the fundamentals of public REITs will be further repaired, and the gap is expected to be gradually bridged. At present, the liquidity shock is also slowing down with the adjustment of investor structure.
Editor-in-charge: Wang Yunpeng.
Proofreading: Wang Wei.
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