Capitaland Commercial C Reit Opens 196 Higher Shanghai Stock Exchange
CapitaLand Commercial C-REIT (CLCR), the eighth listed fund managed by CapitaLand Investment (CLI), experienced a strong debut on the Shanghai Stock Exchange (SSE) on Sept 29. The REIT opened at RMB6.84, which was 19.6% higher than its initial public offering (IPO) price of RMB5.718 per unit.
The listing raised RMB2.29 billion ($409 million) after issuing 400 million IPO units, exceeding the initial estimate of RMB2.14 billion by 7%. Based on the IPO price, CLCR has forecasted a distribution yield of 4.40% for FY2025 ending on Dec 31 and 4.53% for FY2026.
CLCR is the first international-sponsored retail C-REIT in China. Its offline institutional tranche was oversubscribed 253 times earlier this month, setting a new record among retail C-REITs in China. The IPO also saw strong retail interest, with the public tranche closing ahead of schedule and being oversubscribed by 535.2 times.
CLI China CEO Puah Tze Shyang spoke in Mandarin at CLCR’s listing ceremony on Sept 29. He believes the oversubscription “underscores the market’s dual recognition of CLI’s asset management capabilities and the resilience of China’s consumer market”.
Puah added, “We bring over 20 years of REIT management expertise, but we believe that respect is earned, not given. We remain committed to earning our stripes.”
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.
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According to CLI, the majority of the IPO units were allocated to insurance companies, securities firms, and “strategic capital investors”. Representatives from DBS and HSBC attended the Sept 29 listing ceremony.
As announced on Sept 12, 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%.
Only Chinese investors can invest in CLCR. CapitaLand China Trust (CLCT) is a diversified multi-asset class vehicle targeting global investors, with an investment mandate that encompasses retail, office, and industrial assets across Greater China. Meanwhile, CLCR exclusively invests in retail assets in mainland China, targeting domestic investors.
CLI, CLCT, and CapitaLand Development (CLD) collectively hold a 20% interest in the IPO units. In particular, CLCT subscribed for a 5% strategic stake in CLCR at the IPO price of RMB5.718 per unit.
Speaking to Singaporean media, Puah said, “When you combine CLCR and CLCT, what is interesting is that [CLCT] is a REIT-of-REITs. It serves foreign investors wanting China exposure through its stake in CLCR, while it serves a purely domestic, institutional, and retail clientele. But when you switch over, we also have insurance capital that feels a bit like a CLCT because it’s diversified. It allows us to take on a little more risk.”
Puah added, “That’s the beauty of the domestic-for-domestic strategy we have. We have different platforms and can serve a broader and more diversified capital pool.”
About the IPO portfolio
To seed CLCR’s IPO portfolio, CLI and CLD have divested CapitaMall SKY+ in Guangzhou and CLCT is divesting CapitaMall Yuhuating in Changsha to CLCR. CLI expects the divestment to be legally complete by the end of October.
CapitaMall SKY+ is located in Guangzhou’s Baiyun Central Business District, directly connected to Baiyun Park subway station. Meanwhile, CapitaMall Yuhuating is a community mall located in Changsha’s Yuhua District, accessible via two adjacent subway stations on two lines as well as a future subway station on a third line.
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.
Additionally, CLI says 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.
Retail C-REITs
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 Sept 19, before CLCR’s debut, the 74 C-REITs had a total market capitalisation of approximately RMB221 billion.
Retail C-REITs were launched in March 2024 under the broader “consumer infrastructure” or “consumption” labels. Since then, 10 retail C-REITs have listed, but only with one retail asset each, in line with Chinese regulations. Among them is Harvest Wumart Consumer REIT, which listed on the SSE in March 2024 with an underlying supermarket asset located in the central urban area of Beijing.
CLCR is the first retail C-REIT to list with two assets in its IPO portfolio. Puah believes this concession will allow CLCR to show that “scale and diversity is important”. “We bring forward this message to the regulator, but we are still bound by national rules.”
Puah added, “The market appreciates us as well because we clearly have a pipeline… If I’m a C-REIT investor, I would definitely look towards someone – a sponsor – who is able to add scale and diversity because that really protects the performance of the C-REIT.”
Beyond CLCR, CLI is “very open” to working on a ninth listed fund, says Puah, but the “first order of business” is to “make sure CLCR trades well”. “We are always looking out for how the market changes and evolves. We are in the business of running the largest REIT franchise in Asia Pacific. So, if there’s a chance for me to add to [CLI’s] REITs [funds under management], yes, we will do it.”
Sub-fund closes
In addition to the listing of CLCR, CLI closed the first sub-fund, China Business Park RMB Fund IV, under its inaugural onshore master fund in China, the CLI RMB Master Fund.
Established in May with a major domestic insurance company as a co-investor, the Master Fund has RMB5 billion in total equity commitment and invests in a series of sub-funds that acquire income-producing assets with long-term growth potential.
In a Sept 29 announcement, CLI says the China Business Park RMB Fund IV closed with an equity commitment of RMB529 million from the Master Fund.
As part of its capital recycling strategy, CLI has divested a business park into this sub-fund.
CLI also plans to launch a second sub-fund focused on retail assets in 4Q2025 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,” reads CLI’s announcement.
Since 2021, CLI has raised a total of RMB54 billion across its eight onshore funds.
Overall, CLI has recapitalised approximately RMB5 billion of assets in China year to date.
In 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 listing of CLCR and our RMB funds also support our domestic-for-domestic fund strategy to tap into China’s substantial capital market to grow our funds under management and recurring fee income.”