Rental housing REITs in Shanghai performed well

Source: Economic Information Daily

The collective performance briefing of public REITs for affordable rental housing in Shanghai was held recently. It can be seen that in 2023, the operating performance of Shanghai rental housing REITs products is good, and the three products, including ChinaAMC Beijing Affordable Housing REIT, CICC Xiamen Anju REIT and China Resources Youchao REIT, all maintain a high performance achievement rate. Analysts believe that focusing on the revitalization of medium and long-term stock assets, the launch of rental housing REITs will help increase the supply scale of the rental housing market and guide more entities to participate in investment. Catalyzed by policy trends and supported by the resilience of products, the future development of affordable rental housing public REITs is worth looking forward to.

The performance achievement rate in 2023 is high

In the context of the acceleration of the construction of the housing security system in mainland China, the public offering of affordable rental housing REITs in Shanghai has handed over a dazzling "report card" to investors with a group of real data.

Specifically, the operational resilience of Huaxia Beijing Affordable Housing REIT continued to be highlighted, with all core operating indicators exceeding the issuance forecast, achieving an annual amount of 55.05 million yuan for distribution, a cumulative completion rate of 111%, and an annualized cash flow distribution rate of 4.39%, an increase of 44 basis points compared with the issuance forecast.

The operation performance of CICC Xiamen Anju REIT's underlying assets was stable and improving, with a total distributable amount of RMB57.42 million, a cumulative completion rate of 109%, and an annualized cash flow distribution rate of 4.42%.

China Resources Youchao REIT, ChinaAMC Fund, also has stable operations, excellent cash flow production and sustainable distribution capabilities. The amount available for distribution in 2023 will reach 60.76 million yuan, completing 125% of the forecast value in 2023 and achieving a distribution rate of 5.03%.

As one of the important ways to ensure that new citizens and other groups meet their housing needs, data show that during the "14th Five-Year Plan" period, the country initially plans to invest in the construction and raise nearly 9 million units (rooms) of affordable rental housing, which can be seen in the large market scale.

"At present, the construction of affordable rental housing is being accelerated all over the country." An industry insider told reporters, "Therefore, it is the right time to vigorously develop public REITs." The launch of affordable rental housing REITs is not only a linear continuation of China's public REITs pilot, but also an important starting point for the transformation of the real estate industry to a new development model. ”

It is worth mentioning that since the listing of the first single project, affordable rental housing REITs have become a "landscape" in the public REITs market with their stable and excellent operational performance.

According to public information, in 2023, the occupancy rate of most of the underlying assets of the three affordable rental housing REITs listed in Shanghai will remain at a high level, which provides strong support for their stable performance, and the completion rate of the current amount available for distribution will exceed the forecast in the same period, demonstrating a strong anti-cyclical attribute.

The first quarter of 2024 is off to a good start

At the recent collective performance briefing of public offering of affordable rental housing REITs in Shanghai, the heads of the three rental housing REITs products respectively introduced their operating results in the first quarter of 2024. Overall, the products continued to perform steadily and achieved a "good start".

In particular, Huaxia Beijing Affordable Housing REIT is an example, the operation of its underlying assets is stable, and the occupancy rate and collection rate remain high. As of the end of March 2024, the total occupancy rate of the underlying infrastructure projects was 94.95%, and the rental collection rate reached 96.73% in the first quarter.

In the case of CICC Xiamen Anju REIT, the occupancy rate of the project to which the product belongs continues to remain high. Among them, the occupancy rate of Garden Expo Apartment reached 99.53%, and the occupancy rate of Hengqi Apartment was 99.24%. In the first quarter of 2024, the fund achieved an income of 19.54 million yuan, a year-on-year increase of 3.10%; The amount available for distribution was 14.25 million yuan, a year-on-year increase of 1.67%.

As for China Resources Youchao REIT, the overall operation of the two infrastructure project companies under this product is stable, with the occupancy rate of the apartments of the Youchao Sijing project being 94.38% and the apartment occupancy rate of the Youchao Eastern Economic Development Zone project being 94.29%. In the first quarter of 2024, the income at the fund level will be 19.6175 million yuan, an increase of 1.84% year-on-year.

It is imperative to strengthen operational management

It is undeniable that behind the excellent performance of listed projects, it is inseparable from the active implementation of affordable rental housing REITs fund managers and operation management institutions. The sustained and stable performance of the fund is due to the active exploration and in-depth practice of various market participants in various aspects such as information disclosure mechanism, governance mechanism, incentive and restraint mechanism, secondary market trading mechanism, investor relations management mechanism and continuous expansion mechanism.

In the interview, the reporter found that the operation and management characteristics of the three rental housing REITs in Shanghai are outstanding and have their own characteristics.

"The Beijing affordable housing project adheres to the concept of 'job-housing balance', and continues to work in the field of 'living more livable', aiming to improve tenant satisfaction and quality of life." The relevant person in charge of Huaxia Beijing Affordable Housing REIT told reporters, "Especially in terms of improving tenant satisfaction, the operation and management agency team has fully implemented the work of community greening, environmental remediation, housing repair, etc., and increased residents' activities and facilitation facilities in the public areas of the community, working towards the goal of building 'five communities', practicing 'small homes' and creating 'ideal communities'." ”

The operation and management team of the Xiamen Housing Project started with tenant experience and continued to carry out meaningful community activities to enhance tenants' sense of well-being and participation.

"In 2023, the Xiamen Housing Project will carry out a total of five community activities with the theme of 'Building Bridges with Community'." According to the relevant person in charge of CICC Xiamen Anju REIT, "the operation and management team strives to continue to provide tenants with high-quality residential life services, become a provider of a warm living living space, and actively play the leading role of state-owned enterprises in the affordable rental housing market." ”

In the case of China Resources Youchao REIT, two of its infrastructure projects are located in Shanghai, where the transportation is convenient and the supporting facilities are complete, and the leasing demand is strong. Relying on CR Land's resource endowment and the operating genes of holding real estate, CR Youchao is striving to create a green, healthy, safe and comfortable rental housing product with functions such as fitness, learning, socialization, entertainment and recreation. Through the intelligent management system and high-quality market-oriented operation, the project has performed well in the past five quarters, showing strong resilience.

At this stage, the management's top-level design of the development orientation of the housing rental market has promoted the acceleration of the introduction of relevant support policies, and also helped the housing rental market gradually enter the stage of high-quality development.

According to CICC's research, rental housing will inevitably become an important part of the supply increase in China's rental market in the future, and its market share is expected to increase steadily, and the proportion of affordable rental products in the rental market will also be further increased.

A number of investors told reporters that in terms of the performance of the secondary market, the rental housing sector is one of the most stable sectors in the mainland REITs market, showing strong anti-cyclical attributes. Looking ahead, in view of the strong competitiveness of the underlying assets of the above three REITs compared with the surrounding market and the improvement of operational stability, institutions will continue to pay attention to and seize the opportunity to intervene.