Recently, “CITIC-ChinaAMC Suning Yunchuang Special Asset-backed Plan” (hereinafter referred to as “Suning Yunchuang”) issued by China Asset Management Co., Ltd. has completed record-filing procedures with Asset Management Association of China (AMAC), and will be transferred by listing on Shenzhen Stock Exchange (SZSE) as of February 6, 2015. As the first exchange-traded Real Estate Investment Trust (REIT) launched after the implementation of ABS record-filing system, “Suning Yunchuang” represents another innovative attempt by SZSE after the launch of “CITIC Qihang Special Asset Management Plan” (“CITIC Qihang”).
Suning Commerce Group Co., Ltd. is under the transition of operation and business model. Through the launch of “Suning Yunchuang”, the company securitizes 11 of its self-owned stores, which innovates asset operation mode, revitalizes stock assets effectively, and is in line with the company’s Internet strategy. As the first exchange-traded REIT which takes mature commercial properties as underlying assets of securitization, “Suning Yunchuang” sets an example in the industry by providing a brand-new mode of operating and managing commercial properties. Characterized by long development and payback period and large investment volume, commercial property development cannot completely fulfill by bank loans. The use of asset securitization helps to broaden direct financing channels and solves long-term capital needs of commercial properties.
China’s economy development has entered into the “New Normal” phase, which desiderates further innovation in finance to serve and support real economy. In 2014, China Securities Regulatory Commission (CSRC) put forth Researching and Establishing REITs System and Related Product Operation Model and Plan in its Opinions on Furthering the Innovative Development of Securities Institutions. Meanwhile, the issuance of asset-backed securitization was changed from administrative approval system into record-filing system, which substantially increased its issuance efficiency. Recently, the Guiding Opinions of the Ministry of Housing and Urban-Rural Development on Accelerating the Cultivation and Development of the Housing Rental Market has been promulgated, requiring all cities to carry out pilot programs of REITs and gradually extend to other areas. The aforesaid moves indicate that the market condition and policy environment for REITs has become mature gradually, and the hard-won historical opportunity has been brought to REITs.
SZSE has been embarked on REITs research ever since 2003, and has cooperated with related market players in designing products and reserving projects since 2006. It also actively participated in the institutional design and project demonstration of REITs organized by CSRC. SZSE has made solid preparation for launching REITs products. Issuing of “Suning Yunchuang” is the first time for companies listed on the SME board to raise funds via asset-backed securitization. Along with financial innovative instruments rolling out, ways and means for SZSE to serve listed companies are becoming more and more diversified and its comprehensive financial service ability is further enhanced.
With the successive listing of “CITIC Qihang” and “Suning Yunchuang”, certain demonstration effect of exchange-traded REITs will be formed in SZSE. For the next step, on the basis of summarizing product operational experience and managing risk control, SZSE will intensify its efforts on ABS innovation and subsequent product development, enrich investment choices of ABS products, promote REITs products oriented to public investors, enlarge its issuing scale, and strive to form a REITs board for ABS in SZSE.
Product Introduction:
“Suning Yunchuang” is raising RMB 4.395 billion from qualified institutional investors via issuance of asset-backed securitization. Investors subscribe for a PE fund, which is finally used to purchase 11 self-owned stores of Suning Commerce Group Co., Ltd., founded by CITIC Goldstone Fund Management Company Limited. The mentioned properties are under the management of the PE fund. Investors obtain rents and other properties operating income according to transaction documents.