Mainland regulators have given the green light for a real estate investment trust under Chinese e-commerce giant JD.com to list on the Shanghai Stock Exchange, marking the country’s third significant warehouse REIT as demand for logistics space continues to grow.
The stock exchange said Tuesday that the REIT will issue 500 million shares priced between RMB 3.24 ($0.47) and RMB 3.73 ($0.54), with the exact subscription price to be determined based on pricing inquiries. That price range would lead to a total fundraise of $232.7 million to $267.9 million. Harvest Fund Management is the fund manager.
The listing was approved on Monday, according to a statement on the website of the Shanghai bourse, although the timing is undecided. The underlying assets are three logistics parks totalling 350,995 square metres (1.2 million square feet) with a combined value of RMB 1.56 billion ($224 million) in western, central and northern China.
These include the first phase of JD.com Chongqing E-commerce Park, a transshipment and logistics centre in the municipality of Chongqing, as well as the company’s Asia No. 1 Logistics Parks in Wuhan, Hubei province and Langfang, Hebei province.
Beijing-based JD.com, China’s second-largest online retailer by sales after Alibaba Group, operated a nationwide network of over 1,300 warehouses through its logistics services arm, JD Logistics, as of year-end 2021, according to the company’s most recent annual report.
Including “cloud warehouses” operated by third-party warehouse owner-operators, the NASDAQ-listed firm had a logistics network spanning over 24 million square metres. The company launched its first highly automated Asia No. 1 warehouse in Langfang, near Beijing, in the second quarter of 2020.
JD.com touted the facility’s automated storage and retrieval system for bulky items, such as furniture and home appliances, as the first in Asia’s e-commerce industry, offering three times the efficiency of traditional warehouses.
The trio of properties owned by the REIT approved for listing are 100 percent occupied with an average leasing period of five years, compared to the industry average of three years, according to filings on the Shanghai Stock Exchange website.
China REIT Market Heats Up
China’s first batch of REITs went public in the summer of 2021, and by the end of last month, 24 REITs had been approved while 22 were floated on the Shanghai and Shenzhen stock exchanges, according to official data.
About 85 percent of China’s public REITs involve infrastructure themes, including highways, industrial parks, and warehousing and logistics, according to a report by CGTN citing Liu Weimin, general manager of CITIC Securities.
In early November, a logistics fund sponsored by Warburg Pincus-backed industrial developer DNE Group received approval to become China’s first REIT sponsored by a private company. The D&J New Economy Industrial Park REIT is based on a portfolio of four Yangtze River Delta industrial parks with a valuation of RMB 1.38 billion.
Singapore-based logistics giant GLP became the first international company to list a REIT in China when it partnered with a group of mainland firms to launch GLP C-REIT in June 2021. The vehicle’s IPO on the Shanghai exchange issued 1.5 billion shares to raise more than RMB 5.8 billion.
Cornerstone investors included mainland financial institutions Taikang Life, Shoucheng Holdings, Dajia Investment Holding and CICC Wealth Management, with GLP holding a 20 percent interest in the REIT. The trust comprises seven modern logistics assets totalling over 700,000 square metres in Beijing, the Yangtze River Delta, and southern China’s Greater Bay Area.
Hong Kong-based developer ESR in mid-December announced plans for a China REIT seeded with a trio of the group’s logistics projects in the city of Kunshan, west of Shanghai. The infrastructure securities investment fund would be listed on the Shanghai Stock Exchange.
China’s booming e-commerce sector and a shift away from “just in time” manufacturing practices are driving sustained high demand for warehouse space across the mainland, according to industry experts.
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