1. From the dynamic data, the performance of the first public REITs after listing can be divided into three stages
Phase I (the first day of listing, June 21, 2021): driven by the “innovation” mood, the price of public REITs on the first day of listing rose as a whole, and the transaction was more active. The second stage (from June 22 to late August 2021): the transaction is cold and the price fluctuates at a low level. The third stage (from late August 2021 to now): the activity increases and the price trend is good.
2. From the static data, although REITs showed an upward trend, the increase was slightly differentiated
By reviewing the premium rate of each REITs, as of December 27, 2021, we found that the premium rate of environmental protection REITs was higher than that of warehousing and logistics REITs, while the increase of warehousing and logistics REITs was higher than that of Industrial Park REITs. In contrast, the price increase of Expressway REITs was the least obvious. We believe that the best reason for its price rise can be attributed to three points: first, the trading scale is small, and the entry of a small amount of funds may drive the price to rise significantly; Second, the state continues to issue environmental protection policies, which has broad prospects for the development of the industry; Third, the industry barrier is high and the cash flow stability is strong. The main reason for the good price trend of warehousing and logistics REITs is that investors look forward to the development prospect of warehousing and logistics industry and expect the strongest growth of cash flow. The main reason why the price trend of the secondary market of REITs in the industrial park is weaker than the first two types of REITs is that the market’s expectation of the stability of its cash flow is weaker than that of environmental protection REITs, and its expectation of cash flow growth is lower than that of warehousing and logistics REITs. The price rise of REITs in the secondary market of public transport is relatively weak. The main reasons are as follows: first, the tradable scale is large, and it is difficult to raise the price with the same amount of funds; Second, there are no similar underlying assets in the mature REITs market, so it is difficult for investors to obtain comparable underlying assets during analysis, or lead to insufficient purchase intention.
3. Cost performance analysis of REITs investment from the perspective of internal rate of return
Although the income from public REITs of infrastructure comes from the asset side and the product side respectively, the income of the product side is mainly affected by the operation of the asset side. The income on the asset side of public REITs mainly comes from the cash distribution of the fund and the value-added income of underlying assets in the future (the value-added income part refers to property rights REITs in particular). On the product side, in the short term, especially during the period when a large amount of REITs funds are locked, the price fluctuation of the product side is greatly affected by market sentiment, investors’ risk appetite, macroeconomic and other factors. However, the first batch of public offering REITs must invest at least 80% (higher than 80% in actual situation) of the raised funds in the target project, In the long run, the impact of bottom asset operation and income on product end valuation is still dominant. Therefore, we believe that we should focus on the cash flow generated by bottom assets and bring the actual rate of return to investors through its calculation. Some investors believe that we should focus on the cash distribution rate of REITs when analyzing the return on the asset side. However, we believe that due to different cash distribution methods of different products, the cash distribution rate is lack of comparability. When comparing the actual return of each type of REITs, IRR may have a more reference value.
On the whole, the underlying assets of the first REITs are relatively high-quality, and through the observation of their IRR, we believe that they do have a certain investment value, and the slight increase in the secondary market price is reasonable. However, at present, the price of some public REITs has been significantly higher than the issuance price, and there may be some short-term speculation in the market. In fact, the income characteristics of public REITs are more suitable for long-term holding. It is suggested that investors should rationally look at the short-term market performance of REITs, focus on the long-term investment value and avoid chasing up and down.
4. Risk tips
1. The risk of relevant policies falling short of expectations.
2. Risks caused by external force majeure.
3. Due to the economic downturn or the lack of ability of managers, the operation of basic asset projects is less than expected.
