Capitaland Commercial C Reit Opens 196 Higher Shanghai Stock Exchange
CapitaLand Commercial C-REIT (CLCR) made a strong debut on Sept 29, opening at RMB6.84 on its first day of trading on the Shanghai Stock Exchange (SSE). This represents a 19.6% increase from its initial public offering (IPO) price of RMB5.718 per unit.
CLCR, the eighth listed fund under CapitaLand Investment, raised RMB2.29 billion ($409 million) by issuing 400 million IPO units, surpassing its initial estimate of RMB2.14 billion by 7%. Based on the IPO price, CLCR is expected to have a distribution yield of 4.40% for FY2025 ending Dec 31 and 4.53% for FY2026.
As the first international-sponsored retail C-REIT in China, CLCR saw strong interest from both institutional and retail investors during its IPO. The institutional tranche was oversubscribed by 253 times, setting a new record among retail C-REITs in China. The public tranche was also highly subscribed, closing ahead of schedule and being 535.2 times oversubscribed.
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Speaking in Mandarin at CLCR’s listing ceremony, CLI China CEO Puah Tze Shyang said the oversubscription “underscores the market’s recognition of CLI’s asset management capabilities and the resilience of China’s consumer market”. He added that his company remains committed to earning their reputation through their expertise in REIT management.
Under the Chinese IPO process, institutional investors who participate in the bookbuilding exercise are referred to as offline institutional investors, while those subscribing through the public tranche are known as online institutional investors. The majority of CLCR’s IPO units were allocated to insurance companies, securities firms, and “strategic capital investors”. Representatives from DBS and HSBC attended the listing ceremony.
According to a Sept 12 announcement by CLI, cornerstone investors took up 40.11% of the units, while offline institutional investors were allotted 27.92% in the bookbuilding tranche. Online institutional investors subscribed for the remaining 11.97%.
CLCR is limited to Chinese investors, while CapitaLand China Trust (CLCT) attracts global investors with its diversified multi-asset class vehicle that invests in retail, office, and industrial assets across Greater China. Meanwhile, CLCR focuses exclusively on retail assets in mainland China and targets domestic investors.
CLI, CLCT, and CapitaLand Development (CLD) collectively hold a 20% stake in CLCR’s IPO units. CLCT specifically bought a 5% strategic stake at the IPO price of RMB5.718 per unit.
Puah highlights that CLCT is a REIT-of-REITs that caters to a mixed clientele of foreign investors seeking China exposure and a purely domestic, institutional, and retail market. This diversity allows them to take on a bit more risk, making a “domestic-for-domestic” strategy a successful and profitable venture.
CLCR’s IPO portfolio consists of two assets, CapitaMall SKY+ in Guangzhou and CapitaMall Yuhuating in Changsha. These assets have a combined value of approximately RMB2.6 billion, a total gross floor area of 168,405 sqm, and an overall committed occupancy rate of 96%. CLI will remain the sponsor and asset manager for both properties.
CLI plans to support CLCR and CLCT’s growth by providing a “quality pipeline of potential assets”. In China, CLI manages 43 retail properties across 18 cities and has approximately $18 billion in retail assets under management.
The China Securities Regulatory Commission and National Development and Reform Commission have progressively launched C-REITs across various sub-sectors since June 2021. CLCR is China’s tenth retail C-REIT to list so far. Its peers also list only one retail asset each, following Chinese regulations. Since their first retail C-REIT listing in March 2024, CLCR is the first to list with two assets in its IPO portfolio.
CLCR, along with its peers, faces a one-year moratorium from its listing date, preventing them from making new acquisitions. Puah states that they are looking into reducing this period to six months, allowing CLCR to acquire more assets quickly. He adds that the first retail C-REIT listings, who are now halfway through their second year, are also looking at expanding their portfolios.
Despite their success, Puah remains cautious and states that they are looking to limit broadening their portfolio to stabilize its performance. Until they are allowed to inject more assets, this will have to wait.
In addition to CLCR’s success, CLI also celebrates the closing of their first sub-fund, China Business Park RMB Fund IV, as part of their onshore master fund in China. They closed it with an equity commitment of RMB529 million from the RMB Master Fund, which was established in May with a significant domestic insurance company as co-investor. They will launch a second sub-fund that focuses on retail assets later this year, with an expected equity commitment of RMB900 million.
Puah expresses his gratitude for the investors’ trust in their ability to succeed in the Chinese market. In addition, he also highlights that working on a ninth listed fund is a possibility, but their main focus is ensuring CLCR’s stable performance and growth.
Overall, CLI raised RMB54 billion across its eight onshore funds this year. They have also recapitalized RMB5 billion in assets in China year-to-date.
