Event: on April 15, 2022, Shanghai Stock Exchange and Shenzhen Stock Exchange respectively solicited opinions on the business guidelines for public offering of infrastructure securities investment funds No. 3 - newly purchased infrastructure projects (Trial) (Draft for comments), which defined the specific arrangements for raising, information disclosure, decision-making and approval of newly purchased infrastructure projects by REITs.
The guidelines draw on the practical experience of listed companies, and the project requirements are consistent with the initial offering
The guidelines for newly purchased infrastructure projects mainly specify the following contents: 1) conditions for newly purchased infrastructure projects, 2) procedural arrangements for purchased infrastructure projects, 3) information disclosure management and suspension and resumption requirements, and 4) offering and pricing arrangements for raised assets. The guideline has the following characteristics: 1) Marketization: it draws lessons from the relevant practical experience of major asset restructuring and refinancing of Listed Companies in terms of procedures, information disclosure, suspension and resumption of trading; 2) Consistency: it is consistent with the initial offering requirements in terms of standards and requirements for infrastructure projects, strategic placement arrangements, due diligence requirements, information disclosure, etc., and takes into account the relevant arrangements for the stability of infrastructure fund operations; 3) On demand: focus on newly purchased infrastructure projects, and clarify the rules applicable to raising non purchased assets (such as maintenance and transformation).
Highlight the characteristics of the asset listing platform and formulate detailed rules according to the classification of raising objects
The guidelines fully consider the characteristics of REITs' asset listing platform. In terms of fund raising, the raising objects are divided into non-specific objects and specific objects. Offering to non-specific objects includes placing to original holders and public raising. Offering to specific objects is directional raising. The guidelines formulate corresponding rules for the above three types of raising respectively. Considering that the original distributors participating in the strategic placement of REITs fund have the restriction of the shortest holding period, the determination of placement price can be divided into the following situations according to different objects. 1) Placing to original holders: as the placing object already holds REITs funds, the placement price at the time of fund raising shall take into account the valuation of newly purchased assets and the secondary market price of the fund. 2) Public offering: placing all or part of the shares to the holders with priority, taking into account the valuation level of the newly purchased assets raised by the fund and the price level of the REITs secondary market. At the same time, the offering price raised shall not be lower than the average price of the fund secondary market 20 trading days or 1 trading day before the public prospectus in the offering stage. 3) Directional raising: since the raising object is designated and the lock-in period of fund units is specified, the price level of the secondary market shall be referred to, and the offering price shall not be lower than 90% of the average fund transaction price in the 20 trading days before the pricing benchmark date, so as to avoid the contradiction between the rights and interests of the original holder and the placing object.
Strong operation, high distribution ratio and attractive REITs fund
Since the first public REITs were listed in June 2021, 12 public REITs funds have been listed, raising a total amount of 45.812 billion yuan. The latest closing price of 11 of the 12 funds has increased by more than 100% compared with the opening price on the first day of listing (as of April 19, 2022), which has a strong attraction for investment. According to the 2021 annual report of the first batch of listed REITs funds, the completion degree of the distributable amount of the nine funds in 2021 exceeds 100% (calculated based on the adjusted data of the estimated distributable amount in 2021 in the fund prospectus), indicating the strong operation ability of the fund. Cash return is an important feature of REITs. 8 of the 9 funds have actually paid dividends or intend to pay dividends, and the actual planned dividends of 6 funds account for nearly 100% of the amount available for distribution, with a high distribution proportion. With high price increase, strong operation ability and high distribution ratio, REITs fund is very attractive to investors.
Investment advice
Since the listing of the first batch of REITs funds, the characteristics of high price increase, strong operation ability and cash dividend are very attractive to investors. The raising guidelines indicate that it may be possible to inject new assets into the existing REITs funds, and the scale of REITs is expected to be expanded. We are optimistic about companies with strong operation ability of investment real estate such as logistics real estate, warehousing and industrial parks. We suggest paying attention to REITs listed funds.
Risk tips: the policy promotion is less than expected, the fund dividend is less than expected, and the fund operation is less than expected
