On April 30, 2024, the CICC SCPG Consumer Infrastructure Closed-end Infrastructure Securities Investment Fund was officially listed on the Shenzhen Stock Exchange.
On the first day of listing, all three consumer REITs in the same batch fell slightly, and CICC SCPI Consumer REIT was no exception.
The opening price of CICC SCPG Consumer REIT was 3.26 yuan, which was the same as the subscription price, and it opened all the way low after listing, with a maximum decline of 2.95%. In the 10 minutes before the closing, the price fluctuated violently, and the price fell back to the opening price at the moment when it rose back to the opening price, and finally pulled back to the opening price of 3.26 yuan again before the close.
On the same day, the trading volume of CICC SCPG Consumer REIT was 101,800 contracts, with a turnover of 32,846,200 yuan.
The first consumer REITs
CICC SCPG Consumer REIT is one of the first batch of approved consumer infrastructure REITs in China, with a total share of 1 billion shares and a raised scale of RMB 3.26 billion, and the initial asset in the pool is Hangzhou Xixi Impression City Shopping Center in Hangzhou.
In this listing, CICC SCPG Consumer REIT attracted the participation of a number of domestic financial institutions, including Shenzhen Metro Group, China Life Investment Holdings Co., Ltd., and CITIC Securities Co., Ltd.
Among them, Shenzhen Metro Group, the major shareholder of Vanke, as the initial strategic investor, subscribed for about 30% of the share, with an investment amount of nearly 1 billion yuan, which set a record for the largest single investment in consumer REITs by the domestic state-owned assets system.
Market participants believe that the market is worth looking forward to the performance of consumer REITs, and as a long-term investment, the expectation of better investment returns may be relatively high. For consumer infrastructure REITs, the market is most concerned about the risk control and stable income of their underlying assets.
In this regard, the answer given by CICC SCP Consumer REIT is that "high-quality underlying assets and excellent management team will provide strong support for the operational performance of CICC SCP Consumer REIT after listing." ”
According to the prospectus information, CICC SCPG Consumer REIT expects that the amount available for distribution from October to December 2023 and 2024 will be 36.0106 million yuan and 170 million yuan respectively, with cash distribution rates of 4.42% and 5.21% respectively.
Underlying assets
The attractiveness of consumer REITs to investors stems from the superiority of its underlying assets, and the underlying asset of CICC SCPI Consumer REIT is Hangzhou Xixi Impression City Shopping Center. Xixi Impression City is the first ecological shopping center in China, adjacent to Xixi Wetland and radiating to the West Yuhang business district of Hangzhou.
The project is a sub-central shopping center with 4 floors above ground and 1 floor underground. Among them, the first phase of the project started operation in 2013, bringing together more than 200 brands such as Wal-Mart, with more than 20 brand projects entering Hangzhou for the first time, and the second phase started operation in 2018, with 81 new brands, with a total construction area of 250,000 square meters, and as of the end of September 2023, the target infrastructure assets were valued at 3.959 billion yuan.
The most important aspect of consumer REITs for investors is the occupancy rate and rent of the project.
In terms of occupancy rate, from 2014 to 2022, the annual weighted average occupancy rate of Hangzhou Xixi Impression City Shopping Center was 98.2%, and the weighted average occupancy rate in the past five years was about 98.1%.
As of September 30, 2023, Xixi Impression City has an overall construction area of 250,000 square meters, 371 merchants, and an occupancy rate of 99.6%, covering catering, retail, entertainment, services, new energy vehicles and other fields. The occupancy rate of the target infrastructure assets has reached a high level and is showing a stable trend, entering a period of stable operation.
Since its opening in 2013, the project's turnover has been on an upward trend, with a total turnover of more than 3.5 billion yuan in 2022, and a record high of more than 3.2 billion yuan from January to September 2023.
It is understood that the composition of the operating income of commercial projects includes fixed rental income, turnover commission rental income, property management fee income, fixed promotion fee income, multi-economic and advertising income and parking lot income.
In Xixi Impression City, fixed rental income accounted for the highest proportion, reaching 62.3%, providing good support for the operational stability of infrastructure projects.
From January to September 2023, the retail format accounted for the highest proportion of rent, reaching 61.8%, the entertainment format accounted for the lowest proportion, only 4.8%, the catering format accounted for 26.6%, and the service format accounted for 6.8%.
In terms of leasing area by business format, retail format accounted for 54.3%, catering format accounted for 24.5%, entertainment format accounted for 12.2%, and service format accounted for 9.1%. The proportion of leasing area and rental income of various formats is relatively dispersed, which can effectively alleviate the potential impact of market risks of a single format on the project.
In terms of rent level, according to the disclosure in the prospectus, after market research and research by the appraisal agency, the market rent of specialty stores on floors B1-L4 is revised in the range of 25-604 yuan/square meter/month, the fixed rent unit price range of the main store on each floor of Hall A is 54-68 yuan/square meter/month, and the market rent unit price range of the sub-main store is 68-125 yuan/square meter/month.
In terms of the term of the lease contract, as of September 30, 2023, the maximum lease term of the lease contract is 20.7 years, of which the leased area with a lease term of 0 to 5 years (inclusive) accounts for 48.00%, the leased area with a lease term of 5 (exclusive) to 10 (inclusive) years accounts for 16.09%, and the leased area with a lease term of more than 10 (exclusive) years accounts for 35.91%.
In terms of passenger flow, since the opening of the project, the passenger and vehicle flow have shown an upward trend. In 2022, the passenger flow reached about 15 million, and from January to September 2023, the cumulative passenger flow was 15.79 million and the cumulative vehicle traffic was 2.52 million, an increase of 16% and 21% respectively from the same period from January to September 2019, both reaching a record high.
It is worth noting that, according to the content of the prospectus, the promoter SCPG holds a total of 59 projects, of which 58 have been opened, and 1 project is under construction, with a total construction area of more than 6.4 million square meters, covering various product lines of the Impression series, which can be used as potential expansion assets.
At the same time, from Vanke's perspective, in addition to the listing of consumer REITs, Vanke's logistics REITs are already in the inquiry stage of the Shenzhen Stock Exchange, and Vanke's long-term rental apartment REIT is also actively declaring, and Vanke is also expected to become the first company in the industry to achieve a breakthrough in three types of operating REITs.