China Vanke’s first public commercial Reit falls in early trade on debut
CHINA Vanke’s first public commercial real estate investment products fell as much as 3 per cent in early trade on their debut on Tuesday (Apr 30), reflecting caution towards China’s second-largest developer amid a prolonged property market downturn.
The CICC-SCPG Consumption Infrastructure real estate investment trust (Reit) listed in Shenzhen is backed by shopping centres owned by SCPG Holdings, the commercial property platform of Vanke.
The listing came one-and-a-half months after the other three Reits were approved in the same batch. State-backed Vanke is China’s second-biggest property developer by sales and is facing short-term liquidity pressures and operational difficulties.
Vanke’s onshore shares have slumped 28 per cent since the start of the year, and are hovering near the lowest levels since 2014.
The launch of such Reits comes after China expanded the scope of Reits last year to commercial properties as part of the efforts to prop up a battered property sector. The Reits would allow investor funds to flow to property owners while also giving developers an opportunity to exit their projects.
Around 3.3 billion yuan (S$633 million) was raised via the issuance of this Reit, but the fresh funds are still small compared to Vanke’s cash burn.
A NEWSLETTER FOR YOU
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
“We are concerned by the pace of cash position decline which is at 5.6 billion yuan per month,” John Lam, property analyst at UBS, wrote in a note.
With its total cash position of 83.1 billion yuan as at March 2024, the current cash levels can only support 15 months’ cash outflow, if the property market and Vanke’s debt refinancing market remain at current levels, Lam said.
Shenzhen Metro Group, a state-owned entity and the largest shareholder of Vanke, subscribed to 29.8 per cent of the units of the Reit.
Vanke on Monday reported a second consecutive quarterly loss in the January to March period and a drop in its cash levels, after revenue and margins fell sharply.
After tumbling 28 per cent in 2023, the CSI Reits Index has climbed roughly 7 per cent this year. REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Property
China regulators to discuss property aid with banks on May 17
China new home prices fall at fastest pace in over nine years
Country Garden to begin court battle against liquidation threat
US single-family housing starts, permits fall in April
Strong demand for ECs could spur competition for Pasir Ris GLS site
Punggol Digital District to open from Q3 with 65% of space pre-committed