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The first industrial park-backed REITs is expected to be issued in Shenzhen with rental performance being the key factor


On April 23, Shenzhen Stock Exchange (SZSE) officially announced the latest REITs issuance applications, among which included "Bosera-China Merchants Shekou Industrial Park Close-end Infrastructure Securities Investment Fund". This asset portfolio is consisted of two industrial office buildings, namely Wanrong Building and Wanhai Building, with both locating in the Net Valley of Shekou, Shenzhen. With a total GFA of 95,300 sq m, the asset portfolio is valued at RMB2.528 billion with unit price of RMB26,500 psm.

Colliers commented:
According to public information, the monthly rent of the assets is about RMB140 psm, indicating a return rate of 6.3%. According to REITs guidelines issued by SZSE in January 2021, qualified assets need to meet the following criteria: (1) to have a mature and stable operation mode with good growth potential for operating income; (2) to operate no less than 3 years with satisfactory financial return; (3) to have high occupancy rate, good rental performance and reliable tenant mix (for assets such as industrial parks, warehousing and logistics, data centers). China Merchants Shekou REIT is in line with the policy requirements. The rental performance of the subject asset might the key factor to successful issuance.