On December 27th, JiaShi JD Warehousing Infrastructure REIT announced that JD Group founder Liu Qiangdong plans to increase his holdings in the secondary market by no more than 100 million yuan.
According to statistics, the average daily transaction volume of the fund in the past 30 trading days was about 10.24 million yuan, with some trading days even having a scale of only 3-4 million yuan. Therefore, the aforementioned 100 million yuan increase undoubtedly has a certain supporting effect on the trading price of the secondary market. In addition, as the market continues to bottom out, several funds including Huaxia Hefei High tech Innovation Industrial Park REIT and Hua'an Bailian Consumer REIT have officially announced their original equity holders' increase in holdings in the secondary market during the year.
Liu Qiangdong increases holdings in Jiashi JD Warehousing Infrastructure REIT
On December 27th, JiaShi JD Warehousing Infrastructure REIT announced that Liu Qiangdong, founder and chairman of JD Group, as a concerted action person of the original equity holder of the fund, based on his confidence in the future development prospects and recognition of the long-term investment value of the fund and logistics infrastructure projects, will increase his holdings of fund shares through secondary market purchases or other methods recognized by the exchange within 24 months from the date of the announcement, with an increase amount not exceeding 100 million yuan.
According to statistical data, as of December 27th, Jiashi JD Warehousing REIT reported a revenue of 2.76 yuan in the secondary market, with an annualized dividend payout ratio of 5.79%. In addition, the average daily transaction volume in the past 30 trading days was about 10.24 million yuan, with some trading days even having a scale of only 3-4 million yuan. Therefore, the aforementioned 100 million yuan increase undoubtedly has a certain support effect on the trading price.
At a time when the overall market for REITs is bottoming out, there have been occasional increases in holdings of public REITs by original equity holders or concerted action parties during the year.
On December 27th, Huaxia Hefei High tech Innovation Industrial Park REIT announced that the original equity holder of this fund, Hefei High tech Co., Ltd., plans to increase its holdings of this fund by no more than 28 million shares within 12 natural months from December 26th, 2023 (inclusive), and no more than 4.00% of the total issued shares of this fund. As of the disclosure date of the announcement, the implementation period of the increase plan has expired, and Hefei High tech Co., Ltd. has cumulatively increased its holdings of 2594431 shares in this fund, accounting for 0.37% of the total issued shares of this fund. After the implementation of this increase in holdings plan, the total proportion of fund shares held by the original equity holders of this fund has increased from 25% to 25.37%.
In August, Hua'an Fund announced that its subsidiary Hua'an Bailian Consumer REIT had increased its holdings by 10.8449 million shares, accounting for 1.084% of the total issued shares, through the Shanghai Stock Exchange's bidding trading method, on the first day of its listing on August 16, with the original equity holder Shanghai Bailian concerted action.
In March, two new energy REITs, CITIC Construction Investment, State Power Investment New Energy REIT, and AVIC Jingneng Photovoltaic REIT, announced that they had been increased in holdings by the original equity holders.
The discount rate is as high as 15.99%
According to data, JiaShi JD Warehousing REIT was listed on the Shanghai Stock Exchange on February 8, 2023, and is the first privately-owned warehousing and logistics REIT. Its underlying assets include JD Group's three logistics parks located in Langfang, Wuhan, and Chongqing, with a total construction area of approximately 351000 square meters, all of which are scarce high-end warehouses.
Along with the announcement of Jiashi JD Warehousing REIT's increase in holdings, there is also an announcement on the renewal of underlying projects: the fund currently holds the first phase of the JD Chongqing E-commerce Base project (transit distribution center) in Banan District, Chongqing, the JD Asia No.1 Langfang Economic Development Logistics Park project in Langfang Development Zone, and the construction project of JD Mall Asia No.1 Warehousing Central China Headquarters in Dongxihu District, Wuhan.
Among them, the current lease contracts of Langfang project and Wuhan project are being fulfilled normally, and the lease terms have not expired. According to the provisions of the corresponding lease contracts, the rental unit price in 2025 will continue to increase by 3% compared to 2024. In addition, the lease agreement between the Chongqing project company and the main lessee Chongqing Jingbangda Logistics Co., Ltd. will expire on December 31, 2024. The Chongqing project has a leasable area of 184568.56 square meters and is leased to Chongqing Jingbangda as a whole. The net effective rent for 2024 is 23.98 yuan/square meter/month (including tax and property fees, the same below), and starting from January 2025, the net effective rent for the first year of renewal is 20.16 yuan/square meter/month.
According to the third quarter report, JiaShi JD Warehousing Infrastructure REIT continued to maintain a steady growth trend in the third quarter, achieving revenue of 27.0265 million yuan and a net profit of 6.9462 million yuan. At the same time, the net cash flow generated from operating activities was approximately 29.266 million yuan.
It is worth mentioning that although the fundamentals have stabilized, the secondary market is still in a long-term discount state, with a discount ratio of about 15.99% as of December 27th. Moreover, highways, industrial parks, and warehousing and logistics related products are also high-risk areas for discounts, while clean energy, affordable housing, and other related products have a considerable premium.
Haitong Securities believes that the business model of warehousing and logistics parks is undergoing a deep transformation from "logistics facilities" to "logistics ecology". In the future, the industry will continue to receive dual promotion from policies and capital, providing strong support for efficient economic operation. And warehousing and logistics REITs are not only a form of asset securitization, but also an important foundation for future supply chain optimization and logistics efficiency improvement, receiving strong support from the government in recent years.
Reviewing the performance of the secondary market for industrial park REITs over the past three years, CICC believes that fundamental fluctuations are the main factor in the valuation adjustment of industrial park REITs. Since the beginning of this year, after experiencing sufficient valuation adjustments and with some projects showing signs of bottoming out and stabilizing operations, the valuation of REITs in industrial parks has shown signs of recovery and stabilization.
China International Capital Corporation (CICC) stated that the fundamentals of the industrial park project are currently in the bottoming out stage, and the valuation may be within an appropriate range, with medium to long-term allocation value.
High proportion dividends attract insurance capital layout
On December 17th, Hua'an Zhangjiang Industrial Park REIT announced its first dividend of the year. In terms of dividend frequency, Huaxia and Dagao Technology REIT and Huaxia Hefei High tech REIT have completed 5 dividends within the year, while Zhongjin Shandong Expressway REIT and Jiashi JD Warehousing Infrastructure REIT have also completed 4 dividends.
Xu Chenglong, fund manager of CSCI Fund, said that the dividend yield of public REITs is generally higher than the yield of treasury bond bonds, which provides investors with investment options that may obtain higher and more certain returns in the downward cycle of interest rates. He also pointed out that public REITs, as an emerging investment product in China, have both equity and debt characteristics. The funds raised are mainly used to invest in infrastructure projects with stable cash flow. They have low correlation with traditional assets such as stocks and bonds, and have the advantages of high income stability, low investment threshold, and high liquidity.
Stable dividends have also attracted insurance capital with lower risk appetite. In the latest listed list of Hua'an Waigaoqiao Warehousing and Logistics REIT investment on December 25th, institutions such as Pacific Life and Taikang Life have appeared.
In addition, on November 21, China Life Insurance, Ping An Life Insurance, PICC Life Insurance and Zijin Property and Casualty Insurance became the strategic investors of the REIT in the battle investment list of the REIT of China Merchants Expressway respectively through product accounts or their own funds. The sum of the shares of strategic placement and offline placement of insurance companies accounted for 14.74% of the total shares.
A public fund investor in North China pointed out that insurance funds place more emphasis on the stability of overall returns in investment, and tend to allocate diverse and rich assets. The project assets of public REITs mostly have relatively stable cash flows and are favored investment objects by insurance funds. Although there may be price fluctuations in the secondary market, they also conform to the long-term investment attributes of insurance funds.