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An exciting development occurred for CapitaLand Commercial C-REIT (CLCR) as its initial public offering (IPO) on the Shanghai Stock Exchange (SSE) opened a remarkable 19.6% higher than its IPO price at RMB6.84 on September 29. The IPO, which raised RMB2.29 billion ($409 million), exceeded the initial estimate of RMB2.14 billion by 7%. As per the IPO price, CLCR’s forecast distribution yield for FY2025 ending December 31 is 4.40%, and 4.53% for FY2026.

CLCR is the first international-sponsored retail C-REIT in China. Its offline institutional tranche was oversubscribed by 253 times earlier this month, setting a new record among retail C-REITs in the country. The IPO also saw strong retail interest, with the public tranche closing ahead of schedule and being oversubscribed by 535.2 times.

Speaking in Mandarin at CLCR’s listing ceremony on September 29, CLI China CEO Puah Tze Shyang expressed his excitement about the oversubscription, stating that it “underscores the market’s dual recognition of CLI’s asset management capabilities and the resilience of China’s consumer market.” He also added that CLI, as an asset manager with over 20 years of REIT management experience, is committed to earning its stripes through hard work.

In China, institutional investors participating 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 the IPO units were allocated to insurance companies, securities firms, and “strategic capital investors,” according to CLI. Representatives from DBS and HSBC also attended the listing ceremony on September 29.

According to CLI’s September 12 announcement, 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%. It should be noted that only Chinese investors can invest in CLCR. Another important fact to note is that CapitaLand China Trust (CLCT) is a diversified multi-asset class vehicle targeting global investors, while CLCR invests exclusively in retail assets in mainland China, targeting domestic investors.

CLI, CLCT, and CapitaLand Development (CLD) collectively hold a 20% interest in the IPO units. CLCT, in particular, has subscribed for a 5% strategic stake in CLCR at the IPO price of RMB5.718 per unit. Puah explained that when one combines CLCR and CLCT, it is interesting to note that CLCT is a REIT-of-REITs. He said, “We serve foreign investors wanting China exposure through its stake in CLCR; it serves a purely domestic, institutional, and retail clientele. But when you switch over, we also have insurance capital that feels a bit like CLCT because it’s diversified. It allows us to take on a little bit more risk.”

Puah also talked about the “domestic-for-domestic” strategy that CLI has in China, where it has different platforms to serve a wider and more diverse capital pool. He added that he believes this approach of different platforms and diversified capital pools is the beauty of their domestic-for-domestic strategy.

To seed CLCR’s IPO portfolio, CLI and CLD have divested CapitaMall SKY+ in Guangzhou and CLCT is divesting CapitaMall Yuhuating in Changsha into CLCR. CLI expects the divestment to be legally completed by the end of October. The two malls have a combined value of approximately RMB2.6 billion. They span a total gross floor area (GFA) of 168,405 sqm and have an overall committed occupancy rate of 96%. As the sponsor and the asset manager of CLCR, CLI will continue to operate CapitaMall SKY+ and CapitaMall Yuhuating.

Furthermore, CLI has said that it will support the growth of CLCR and CLCT through its ability to offer a “quality pipeline of potential assets.” In China, CLI manages 43 operational retail properties across 18 cities, with total retail assets under management of approximately $18 billion.

The China Securities Regulatory Commission and National Development and Reform Commission have progressively launched C-REITs across different sub-sectors since June 2021. With the listing of CLCR, there are now 75 C-REITs across various asset classes, including rental housing and logistics. As of September 19, before CLCR’s debut, the 74 C-REITs had a total market capitalization of about RMB221 billion.

Exciting transformations are in store for Tampines, a bustling town that is eagerly anticipating the arrival of the Cross Island Line (CRL), a new and convenient transportation system. One of the major highlights of this development is the Tampines North MRT Station, strategically situated along the CRL. This station will provide direct access to major hubs such as the CBD, Jurong Lake District, and Changi Airport, making travel between these key destinations effortless.

However, the advantages of the CRL go beyond just the MRT station. Tampines and its neighboring areas will also witness improvements to their bus networks and cycling paths, creating an interconnected and eco-friendly commuting experience. This aligns with the town’s commitment to promoting sustainable modes of transportation.

In addition to these transportation enhancements, the Tampines Town Hub will also undergo upgrades. This includes the addition of new and enhanced facilities such as a library, community center, and a hawker center. These enhancements will not only benefit the residents of Tampines but also the numerous visitors drawn to the town by its vibrant shopping malls and lively community events.

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Ten retail C-REITs have listed since China launched retail C-REITs in March 2024 under the broader “consumer infrastructure” or “consumption” labels. However, only C-REITs with one retail asset each launched, in line with Chinese regulations. This restriction does not apply to CLCR, which is the first retail C-REIT to list with two assets in its IPO portfolio. Puah believes this concession will allow CLCR to demonstrate that “scale and diversity are important.” He also revealed that they have discussed this issue with regulators, and they hope to reduce the one-year moratorium period from the listing date, which currently blocks new acquisitions.

The earliest retail C-REITs, which have spent a year and a half on the market, are preparing to grow their portfolios. Puah revealed that the sponsor of China Resources Mall REIT, which listed on the Shenzhen Stock Exchange in March 2024, has identified and announced their next injection of assets.

According to Puah, “The market appreciates us as well because we clearly have a pipeline… If I’m a C-REIT investor, I would definitely look for someone who is able to add scale and diversity. That really protects the performance of the C-REIT.”

As for CLI, it is “very open” to working on a ninth listed fund, says Puah, but the “first priority” is to make sure CLCR trades well. He also added that they are always on the lookout for opportunities to add to their REITs [funds under management]. Therefore, they are very open to launching a new fund if given the chance.

In addition to the listing of CLCR, CLI has closed the first sub-fund, China Business Park RMB Fund IV, under its inaugural onshore master fund in China – the CLI RMB Master Fund. The Master Fund, which was established in May with a major domestic insurance company as co-investor, has a total equity commitment of RMB5 billion and invests in a series of sub-funds that acquire income-producing assets with long-term growth potential. The China Business Park RMB Fund IV closed with an equity commitment of RMB529 million from the Master Fund.

Lastly, CLI plans to launch a second sub-fund focused on retail assets in the fourth quarter of 2025, with a target equity commitment of RMB900 million. “CLI has a pipeline of retail assets, logistics parks, and rental housing across Tier 1 and top Tier 2 cities that could potentially provide growth opportunities for this platform,” according to CLI’s announcement.

In his prepared remarks, Puah said, “The listing of CLCR and the continued growth of our RMB Master Fund demonstrate strong momentum in our capital recycling journey and pivot to asset-light business model. The market listing of CLCR and our RMB funds also support our domestic-for-domestic fund strategy to tap into China’s substantial capital market, build our funds under management, and generate recurring fee income.”