Chinese state-owned enterprise, Shanghai Bailian, is poised to make China’s first public offer of a shopping mall real estate investment trust (REIT).
The company plans to seed the trust with its Shanghai Festival Walk shopping centre project, located in Shanghai’s Yangpu District.
“Through the issuance of publicly-offered REIT products, in response to the call of Shanghai’s ‘REITs 20’ policy, the introduction of innovative financial instruments will deepen the reform of state-owned enterprises, improve the investment and financing mechanism and drive reform and development of state-owned enterprises with financial innovation,” Shanghai Bailian said in a statement.
“Listing of the REIT will improve the investment efficiency and management efficiency of state-owned capital and realise the maintenance and appreciation of state-owned assets.”
The company’s RMB80bn (€10bn) property portfolio, includes department stores, supermarkets, shopping malls, convenience stores and speciality retail outlets.
Shanghai Bailian said the initial public offering (IPO) was still in the “application stage”, which meant it needed to be reviewed and approved by relevant regulatory agencies. Uncertainties could still emerge, it said.
Sigrid Zialcita, chief executive of the Singapore-based industry peak body, APREA, told IPE Real Assets: “In March this year, the authorities expanded its pilot REIT programme to include retail properties – what it termed as consumer-related infrastructure. The move will allow retail-focused entities to monetise and unlock value from its balance sheet by securitising them as REITs.
“Not only does the move adds a further dimension into the rapidly growing C-REIT sector, it also aligns with the country’s economic priorities to boost consumption,” she said.
Since the first batch of C-REITs, consisting mostly of infrastructure and logistics-industrial parks, were listed, Chinese authorities have allowed companies owning rental property to go public.
So far, 25 real estate investment trusts have been listed on the Shanghai and Shenzhen stock exchanges. Collectively, they had raised more than RMB80bn as of the end of February.
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