Prelude To The Opening Of Public Reits Trillion Track? Institutional Investors Say They Should Be Enthusiastic

Public REITs funds have made rapid progress.

On May 8, 2021, 10 REITs products have been reported.

On the evening of May 17, the first nine public REITs funds were officially approved by the CSRC.

On May 19, the first batch of 9 public REITs funds issued inquiry announcement, prospectus, custody agreement and other documents.

From May 24, some public REITs funds will start to inquire; From May 30, some public REITs will be subscribed.

On June 7, some public REITs determined the final sale shares of offline and public parts; On June 11, some public REITs funds will be officially established.

The reporter of 21st century economic report investigates and understands that institutional investors are very enthusiastic about the first nine public REITs funds.

Most market participants believe that in the following issuance, although the overall fund issuance market is cold, the first batch of public REITs funds may still be "over raised" and "proportional placement".

Trillion track?

For investors, public offering REITs is a new thing. However, the potential scale of China's public REITs market is more than trillion yuan.

According to a research report from Guanghua School of management, Peking University, it is conservatively estimated that the market size of China's publicly raised REITs will reach 4 trillion yuan to 12 trillion yuan.

On May 17, the China Securities Regulatory Commission officially approved the registration of the first nine public offering REITs. It indicates that the pilot process of infrastructure public offering REITs has crossed an important milestone.

Among the first nine public offering REITs, there are four in Shenzhen Stock Exchange and five in Shanghai Stock Exchange. According to the statistics of reporters, it is estimated that the total amount of raised REITs is nearly 30 billion yuan.

From the first four infrastructure public offering REITs projects of Shenzhen Stock Exchange, they are AVIC Shougang biomass closed infrastructure securities investment fund, Boshi Merchants Shekou industrial park closed infrastructure securities investment fund Ping'an Guangzhou Communications Investment Corporation Guanghe Expressway closed infrastructure securities investment fund and laterite innovation Yantian Port warehousing and logistics closed infrastructure securities investment fund. It is estimated that the total scale of the fund-raising will be nearly 14 billion yuan.

From the first five infrastructure public offering REITs projects of Shanghai Stock Exchange, they are Huaan Zhangjiang Guangda park closed infrastructure securities investment fund, Zheshang Securities Shanghai Hangzhou Ningbo Hangzhou Huizhou Expressway closed infrastructure securities investment fund, Fuguo first water closed infrastructure securities investment fund, and Soochow Suzhou Industrial Park industrial park closed infrastructure securities investment fund and CICC global warehouse logistics closed infrastructure securities investment fund.

There are three ways to sell REITs funds: through targeted placement to strategic investors (strategic placement), inquiry offering to qualified offline investors (offline offering) and public offering to public investors (public offering).

It is worth mentioning that compared with general funds, public REITs funds have an inquiry link in subscription, which is similar to IPO of listed companies. To this end, the first batch of public REITs specially issued inquiry announcement.

From the perspective of the whole process, first of all, public REITs funds need to make an inquiry for offline institutional investors, and then issue an inquiry announcement. Investors willing to subscribe participate in the IPO system of the exchange according to the price range; After the inquiry, complete the pricing according to the quotation; Then, investors report the subscription amount according to the pricing, and complete the offering process after confirmation; Finally, the fund was established and listed.

According to the REITs product information released by the Shanghai Stock Exchange, according to the process, t day, that is, May 31, is the Subscription Date and payment date of offline fund units, and the Subscription Date and payment date of public fund units; T-8 (May 19) disclosed the prospectus, inquiry announcement and other documents; T-7 offline roadshow; T-5 (May 24) is the inquiry date; The sale announcement was published on T-1. Investors can buy REITs funds on May 30.

On the whole, the inquiry time of 7 public REITs products was on May 24 and 2 on May 25.

Among the 9 public REITs funds, the inquiry range of 6 funds is mostly between 2 and 5 yuan, and that of 3 funds is between 8 and 10 yuan.

Attract a large number of institutional investment

Investors are most concerned about the attractiveness of public REITs funds?

"The public REITs funds are relatively low risk, lower risk compared with stock funds and higher risk compared with fixed income funds. As a new variety, public REITs provide investors with a new investment target. Investors can fully understand the public REITs according to their own risk preference and then invest. " Yang Delong, chief economist of Qianhai open source fund, said.

In addition, Boshi fund points out that as an effective tool for portfolio diversification management, public REITs have low correlation with other asset classes. Investment in public REITs helps to reduce the portfolio risk composed of stocks and creditor's rights and improve its dividend rate. In addition, due to the mandatory dividend requirements of public offering REITs and the benefits of stable dividend payment level and mature operation of assets, REITs can effectively hedge the risk of cyclical fluctuations.

From the perspective of the enthusiasm of strategic investors, public REITs are very popular.

The first nine public REITs funds will initially raise about 30 billion yuan. The proportion of strategic placement of each fund is more than 55%, ranging from 55.33% to 78.97%. Four strategic placements account for more than 70%. For example, Zhejiang HANGHUI 74.30%, shouchuang water 76%, pulos 72%, Guangzhou Guanghe 78.97%, indicating that a group of institutional investors like public REITs funds.

The strategic investors of the first nine public REITs funds accounted for a large proportion, which led to a small share of public investment and issuance on the Internet and offline other than strategic placement.

Therefore, the market believes that even in the current weak market, the issuance of the first batch of 9 public REITs funds is likely to be "over raised" and "proportional placement". Among them, bank financing subsidiaries, securities companies, insurance companies, etc. are highly motivated to participate in the strategic placement and inquiry of public REITs.

Taking Guangzhou Guanghe products with the highest proportion of strategic placement as an example, the inquiry range of the fund is 12.471 yuan / share - 13.257 yuan / share, and the inquiry time is May 25. 700 million shares were approved to be raised. Among them, 552.8 million strategic placement shares accounted for 78.97% of the total amount of fund units sold; The number of initial offline sales was 112 million, accounting for 76.22% of the total sales after deducting the number of initial strategic placements; The initial number of public investors to sell is only 35 million copies, accounting for 23.78% of the total number after deducting the number of initial strategic placements.

According to the announcement, Ping An fund is the manager of public offering REITs of Ping An Guangzhou exchange and Ping An Securities is the manager and financial advisor of asset-backed securities. Both parties jointly assist Guangzhou Communications Investment Group Co., Ltd. to complete the application of this public offering REITs project.

The corresponding infrastructure project of the product is Guanghe Expressway (Guangzhou Section), which is located in the core area of Guangdong, Hong Kong and Macao Bay area, with a total length of 70.75 km, which is the largest valuation and scale of the first batch of public offering REITs in China. With the issuance of REITs products, we can break through the development and investment and financing chain in the whole life cycle of "investment, financing, construction, management and withdrawal", optimize the business model, and realize continuous and stable profit contribution, and promote the sustainable, healthy and stable operation of the project.

The expressway assets invested by public raised REITs of Ping An Guangzhou traffic investment Co., Ltd. are regarded as one of the relatively high-quality investment targets. From the industry point of view, after many years of system reform, the main body of Expressway in most provinces has completed centralized management, and each region has a dominant expressway business entity, which accounts for a relatively high proportion of business and has obvious characteristics of agglomeration. According to the statistical bulletin of national toll roads in 2019, as of 2019, the mileage of expressways in China has reached 142800 km, accounting for 83.48% of the total mileage of toll roads. Among them, 74500 km of government subsidized expressways, accounting for 52.13% of the total mileage of expressways, and 68400 km of operational expressways, accounting for 47.87% of the total mileage of expressways.

Ping An fund REITs related person in charge said, "China's such a huge highway precipitation assets, through public REITs is a very good choice." Public offering REITs have the attribute of equity financing tools, which can activate the stock assets and effectively help enterprises reduce the debt ratio. From the perspective of investors, highway public offering REITs is a financial product with relatively controllable overall risk and relatively stable dividend. It is not only suitable for institutional investors, but also attractive to ordinary investors.

While the other public REITs, China Merchants Shekou Industrial Park REITs, has been sought after by the capital market. Various types of professional institutional investors are enthusiastic and actively participate in it. Under the condition that 30% of the original planned external strategic placement (excluding the original equity holders' subscription part) is reserved, it has nearly 3 times oversubscribed. At present, the REITs of China Merchants Shekou Industrial Park has finally locked in more than 10 strategic investors. In addition to the original equity holders, other types of strategic investors are insurance funds, large-scale central enterprise investment institutions, industrial funds, banks and securities dealers' self-supporting and financial management funds.

In addition to institutions, retail investors are also concerned about public REITs. It is reported that many retail investors are consulting related products recently.

According to an industry insider, the stock market is not very good now, and the "rigid" cashing of bank financial products will end. From the perspective of risk and income, public REITs is a good substitute for products.

"A place for strategists"

At present, the public REITs is the place where powerful managers of public offering must contend.

From the perspective of the first batch of 9 public REITs funds, there are generally 3 proposed fund managers for each fund, among which 4 are proposed to be fund managers of Shougang greenenergy.

Most of the relevant fund managers have previous work experience in relevant industries, and they are talents introduced by public offering managers to promote the business of public offering REITs.

In fact, many public offering managers not only prepare talents for public REITs early, but also build their own REITs teams and constantly develop research projects.

Since the beginning of the pilot research in 2019, Guotai Junan has established a professional team, established a multi department joint promotion group of public REITs within the group system, arranged the infrastructure REITs market in advance, closely followed the policy progress, and deeply studied industrial problems and solutions such as state-owned assets transfer and tax planning in different regions.

Boshi Fund said that it started REITs research work as early as 2008, and reserved professionals in the field of real estate investment; Boshi capital, a wholly-owned subsidiary of Boshi fund, has also operated multiple ABS and REITs projects since its establishment in 2012.

Last year, after the issuance of relevant notices and regulations on public REITs, Boshi fund established a working group of public REITs with the resources of parent subsidiary companies, and recruited many professionals with investment and operation ability of REITs in time.

At the same time, the company effectively cooperated with China Merchants Securities and CITIC Securities to exchange and communicate their rich experience in equity financing, private REITs and other asset securitization fields, and jointly promoted the process of Boshi zhaoshe REITs project on the basis of independent due diligence.

Ping An Fund said that the company is one of the pioneers in the early layout of public offering REITs business in China. At present, the company has established a full-time team of more than 10 people. The product members have professional experience in IPO, finance, law, taxation and asset evaluation. The operation personnel are from domestic mainstream highway operation and investment institutions, and all have more than five years of infrastructure investment and operation management experience.

In addition to the first batch of 9 public REITs funds, many fund companies have expressed their intention to apply for public REITs products to 21st century economic report reporters.