Since the beginning of this year, the REITs market has undergone a deep round of valuation digestion and emotional release. The CSI REITs All Income Index gradually returned to 929 points on June 24 from its high of 1057 points on January 29, with a correction of about 12%. Among them, in mid June, short-term liquidity was under pressure due to the concentrated stop loss of some funds. However, there have been clear signs of bottoming out in the market recently, with the index rebounding from its low point to 982.33 points on July 3rd.

The core driving force behind this round of adjustment is the structural rebalancing and emotional transmission under the expectation of supply expansion, rather than the trend deterioration of underlying asset fundamentals. At present, the resilience of fundamentals is highlighted, the supply-demand pattern is moving towards a new equilibrium, and the attractiveness of valuations is significantly enhanced. The market is in a reference window period for medium - and long-term layout. It is recommended that investors maintain composure and wait for value to return.

The resilience of underlying asset management is highlighted, and the fundamentals are stable and improving

According to the first quarter report data of 2026, the underlying assets of various formats of public REITs continue to operate steadily, with over 70% of projects achieving profitability, demonstrating strong resilience to cycles.

The anti cyclical sector continues to lead.The rental rate of the affordable housing sector remains high, with 8 rental housing REITs disclosing rental rates of over 90% in Q1 26, and quarterly revenue growth to varying degrees compared to the same period last year; The revenue of the consumer sector REITs in the first quarter achieved positive growth, outperforming the national social zero performance (cumulative social zero performance from January to March+2.4% year-on-year, source: National Bureau of Statistics). The overall performance achievement rate (i.e. actual available for distribution amount/predicted available for distribution amount in the recruitment letter) of the 20 new REITs with comparable data exceeded 100%.

Warm sentiment is emerging in the differentiation of cyclical plates.Tenants in the data center sector generally have longer remaining lease terms, with an average remaining lease term of 8.75 years and 3.24 years for the two data center REITs as of Q1 26, respectively. Since their listing, the listing rate has remained above 95%; The high-speed sector benefits from road network optimization and traffic flow repair, with 60% of projects having a year-on-year increase in available allocation funds; Although the municipal environmental protection and energy sector is affected by seasons and natural conditions, the essential demand attribute and mechanism electricity price contribute to the overall stable performance.

The industrial park and warehousing logistics are showing a bottoming out trend.The quantity and price of factory assets are stabilizing, and the overall marginal improvement in the occupancy rate of the warehousing and logistics sector is observed. The rental prices of market-oriented leasing projects have slightly recovered on a month on month basis (+0.11%). At the same time, fund managers actively hedge operational pressure through diversified income and negative provision of management fees. Overall, the marginal improvement in some asset fundamentals provides support for the market, and periodic adjustments may bring opportunities to focus on high-quality assets with more reasonable valuations.

The supply-demand pattern is moving towards a new equilibrium, and index investment is ushering in a new era

On the supply side, project implementation releases pressure and lays the foundation for asset quality.The first batch of 4 commercial real estate REITs were successfully listed on June 18th, and the second batch of projects were also approved. During the issuance phase, the public shares were sold out in one day, with an average subscription multiple of nearly 80 times offline, fully demonstrating the market's ability to absorb. The newly launched projects are all mature operational properties with stable cash flow, which have not formed a capital siphon for the secondary market, but have instead enriched the allocation options.

On the demand side, index funds are being issued, and the micro trading structure is undergoing profound changes.In mid June, the first batch of four CSI REITs full income index funds were officially approved and will be publicly offered from July 1st to 7th, bringing a total of 1.2 billion yuan in incremental funds to the market (data source: CSRC approval and fund prospectus). This not only fills the gap in index based investment and solves the pain point of high entry barriers for small and medium-sized investors, but also adapts to the allocation preferences of long-term funds such as social security, annuities, and insurance. Referring to the experience of the US REITs market, the widespread participation of mutual funds and ETFs is an important reason for the long-term stability of the market. The liquidity and pricing efficiency of China's REITs market are expected to continue to improve accordingly.

Enhanced valuation attractiveness and highlighted cost-effectiveness of configuration

After adjustment, the overall valuation of the REITs sector has fallen back to the historical low range, and trading odds have significantly increased.

The dividend payout ratio has significantly rebounded and is in the historical bottom zone.As of late June, the overall dividend payout ratio of equity REITs has risen to 4.65%. Among them, the dividend payout ratios of the warehousing and logistics and industrial park sectors reached 5.55% and 5.65% respectively, both of which are in the high percentile of 96% and 97% in the past three years; Consumer and data center accounts for 4.39% and 3.81% respectively. In terms of franchise rights, the IRR of highway REITs is as high as 7.13%, and that of energy REITs is 3.58%.

The relative interest rate spread is in the historical high range, and the high dividend characteristics highlight the attractiveness of allocation.As of June 24, the difference between the cash distribution rate of property rights REITs and the interest rate of ten-year treasury bond bonds was close to 3.0%, a very high percentage in the history of 97.9%. In the context of the current 10-year treasury bond yield of about 1.72%, REITs' mandatory dividend distribution and high interest rate make their allocation cost performance ratio particularly prominent, and become one of the high-quality adaptive assets for "fixed income+" products to optimize the yield structure.

The cost-effectiveness of configuration is gradually emerging, and deep investment and research are empowering configuration efficiency.The valuation of the sector has reached its bottom, and the reversal window is gradually opening. Institutional investors with deep investment and research capabilities are expected to optimize their portfolio risk return characteristics and improve asset allocation efficiency in the long run through a "dumbbell shaped" allocation strategy - one end anchoring anti cyclical assets such as rental housing and municipal environmental protection to earn stable dividends, and the other end laying out marginal repair tracks such as data centers and high-quality warehousing to gain elasticity.

Note: Unless otherwise specified, all data in this article are from announcements by Wind and various REITs

Risk Warning: Funds carry risks and investments should be made with caution. Investors should read legal documents such as the Fund Contract, Prospectus, and Product Information Summary to understand the risk return characteristics of the fund, especially the unique risks, and judge whether they are suitable for their own risk tolerance based on their investment purposes, investment experience, asset status, etc. The fund manager promises to manage and utilize the fund assets in accordance with the principles of honesty, trustworthiness, prudence, and responsibility, but does not guarantee that the fund will always make profits or that the principal will not be lost. Past performance does not predict future performance, and the performance of other funds does not constitute a guarantee of the performance of this fund.