Economic Observer reporter Tian Guobao

According to data from Tonghuashun, as of November 4th, the average annual increase of 11 public REITs for rental housing was 5.9%, second only to the water infrastructure sector and ranking second in the public REITs market. During the same period, the average decline of 95 products in the entire market was 7.79%.

In the past three months, the rental housing sector in the public REITs market has risen by an average of 6.99%, ranking first among all sectors; The average market decline during the same period was 0.73%. Among the 11 rental housing REITs, 8 have increased and 3 have decreased during the year, while all have increased in the past three months.

The park, warehousing and logistics sectors have experienced significant declines this year. Among them, all 20 products in the park sector fell within the year, with a median decline of 26.62%, and a decline of 4.29% in the past three months.

A securities firm insider engaged in public fund business told the Economic Observer that the strength of the rental housing sector is due to the significant increase in newly listed products, which has raised the sector average; Secondly, the low interest rate environment drives the market to reassess the value of rental housing assets; Thirdly, compared to some other types of assets, the operation of rental housing is relatively stable.

In his opinion, rental housing can maintain rental rates by adjusting rents, while industrial parks may not necessarily solve the problem of leasing by lowering prices.

Resilience

Among the 11 public REITs for rental housing, 3 are newly launched products in 2026. As of November 4th, the AVIC Beijing Changbao Rental Housing REIT, established in April this year, has seen a cumulative increase of 27.28% within the year and a 2.43% increase in the past three months; The Zhongjin Hangzhou Anju Ningchao REIT and Guotai Haitong Zhongjian Rental Housing REIT, which went public in October, have seen an increase of 24.75% and 9.69% respectively in the past three months.

Excluding these 3 products, the remaining 8 have seen an average increase of 5.01% over the past three months. Among them, Huaxia Beijing Affordable Housing REIT, China Merchants Fund Shekou Rental Housing REIT, CICC Xiamen Anju REIT, and Huatai Suzhou Hengtai Rental Housing REIT increased by 8.81%, 8.67%, 6%, and 5.73% respectively.

Some products have recently rebounded and have not yet recovered from the year's decline. Laterite Innovation Shenzhen Anju REIT and Huaxia Fund China Resources Nest REIT rose 1.68% and 2.6% respectively in the past three months, and still fell 4.46% and 5.84% respectively in the year.

CICC Xiamen Anju REIT was listed in August 2022, and the price gradually rebounded after hitting bottom in February 2024, reaching a historical high in October 2025, and then falling back thereafter. Since September this year, the product has risen again and turned into a slight fluctuation at the end of October.

As of the midday closing on November 6th, CICC Xiamen Anju REIT has risen 78.49% since its listing, fallen 1.51% in the past year, risen 6% in the past three months, and fallen 1.24% in the past week. Huaxia Beijing affordable housing REIT, which was listed in the same batch, has risen by 88.2% since its listing. In the past year, three months, and one week, it has risen by 6.76%, 9.93%, and 0.29% respectively.

According to a report from Huafu Securities, from October 26th to 30th, the CSI REITs index fell by 1.28%, with industrial parks, warehousing and logistics, and rental housing sectors falling by 3.96%, 2.34%, and 0.89% respectively.

The above-mentioned securities institution insiders believe that the differentiation of performance among various sectors is related to the operating conditions of underlying assets and market valuations. The demand for some franchise assets is relatively stable, but their valuation will also be affected as the remaining operating years shorten; There is a high supply in the park market, which puts pressure on rental rates and rents, thereby affecting valuation; After the slowdown of real estate transactions, rental demand increased, and the relatively stable operating performance of rental housing achieved higher valuations in a low interest rate environment.

In his opinion, within the rental housing sector, public rental housing is more resilient than market-oriented rental housing due to its more stable tenants. Investors in public REITs are more concerned about cash flow, and the impact of short-term book gains and losses on prices is relatively limited.

In the third quarter, the average monthly rent of China Merchants Fund Shekou Rental Housing REIT was 103.89 yuan/square meter, a year-on-year increase of 1.40%; The average monthly rent of Shenzhen Anju REIT of Red Earth Innovation was 36.24 yuan/square meter, up 0.86% year on year; The average monthly rent for Guotai Haitong Chengtou Kuanting affordable housing REIT was 130.83 yuan/square meter, a year-on-year decrease of 0.59%. The rental changes for these products are relatively small.

Cash Flow

The allocation rate of rental housing REITs is not the highest among all sectors. Based on the closing market value on November 4th and a simplified annualized estimate of the available allocation amount in the third quarter, the median allocation rate for rental housing REITs with corresponding data is about 3.14%, while the consumer infrastructure, warehousing and logistics, and industrial park sectors are about 4.51%, 4.84%, and 5.73%, respectively.

The distributable amount of Shenzhen Anju REIT of Red Earth Innovation in the third quarter was about 12.2167 million yuan, and the total fund shares were 500 million, equivalent to about 0.0244 yuan per share. Based on the closing price of 3.3 yuan/share on November 4th, the annualized distribution rate is approximately 2.96%. According to the same method of estimation, Guotai Haitong City Investment Kuanting Affordable Housing REIT is approximately 3.46%.

The rental housing sector with lower allocation rates has a relatively stable increase in available allocation amounts. According to the sample statistics of comparable data from Shenwan Hongyuan Securities in the third quarter, the income of the affordable housing sector decreased by 0.3% year-on-year, while the available allocation amount increased by 5.4% year-on-year; The available allocation amount for warehousing logistics and industrial park sectors decreased by 7.3% and 33.1% respectively year-on-year.

Calculate the distribution rate based on market value as the denominator, and the lower the fund price, the higher the distribution rate may be. According to a report by Shenwan Hongyuan Securities, the price to net asset value (P/NAV) ratio of rental housing REITs is generally between 1.13 and 1.39 times, while some industrial park REITs are less than 1 time.

The rental rate and rent collection rate of rental housing projects provide support for cash flow. According to the third quarter report, the four projects of CICC Xiamen Anju REIT hold a total of 7354 housing units with a rentable area of approximately 288500 square meters. As of the end of September, the occupancy rate calculated based on building area was 98.95%, and the rent collection rate was 100%; The rental rate of AVIC Beijing Changbao Rental Housing REIT at the end of the third quarter was 95.66%, with a collection rate of 99.93%.

The above-mentioned securities institution personnel introduced that the daily distribution of some franchised REITs includes principal recovery, and the distribution rate cannot be regarded as investment income in its entirety. The attractiveness of rental housing REITs comes more from higher occupancy rates and expectations of sustained rental income.

He divided rental housing assets into two categories: public rental housing and market-oriented rental housing. The rent of public rental housing is lower than the market level, and the demand is relatively sufficient. Taking the underlying assets of a public rental housing REIT in a first tier city as an example, the number of tenants waiting in line is three times that of the supplied housing. After a group of tenants vacate, new tenants can quickly be added.

The pricing of market-oriented rental housing is more flexible. When the occupancy rate is lower than expected, promotional measures such as reducing rent can be used to recruit tenants, and some projects also have supporting commercial income.

A person in charge of the underlying asset project of public REITs for rental housing told Economic Observer that when there are many competing projects in the surrounding area, the rental rate and rent of the projects will be under pressure. He believes that the rental demand in first and second tier cities is relatively sufficient, and the project can reduce rent and increase rental rates, and compensate for some rental losses through value-added service income. There is relatively more room for business adjustment.

Rent collection and reinvestment

On June 4th, CICC Xiamen Anju REIT raised approximately 789 million yuan and went public to acquire Linbian Apartments in Siming District and Renhe Apartments in Huli District, Xiamen. The company added 2689 new properties with a total rentable area of approximately 89900 square meters.

The Xiamen Securities Regulatory Bureau disclosed that the assessed value of the assets purchased this time is RMB 686 million, with a premium of 15% for the fundraising. The original equity holder Xiamen Anju Group withdrew funds through asset outflow and used the withdrawn funds for the construction of new affordable housing in accordance with regulations.

The original Yuanbo Apartment and Hengqi Apartment of Zhongjin Xiamen Anju REIT were put into operation in November 2020, while the Linbian Apartment and Renhe Apartment purchased through fundraising were put into operation in September and April 2022, respectively. Four projects are located in different areas of Xiamen, covering two types of housing: affordable rental housing and public rental housing.

In the third quarter of 2026, the average rent of CICC Xiamen Anju REIT increased by 5.5% year-on-year, with two existing projects rising by 2.07% and 1.89% respectively. The overall increase in average rent is mainly due to the inclusion of higher rent raised assets in the statistics.

This expansion will issue approximately 213 million fund shares at a price of 3.697 yuan per share. The newly purchased housing has increased rental income, and the fund shares have also increased accordingly. For secondary market investors, the purchase price, subsequent occupancy rate, and newly available distributable amount of the raised assets affect the returns that each fund can obtain.

The above-mentioned securities institution personnel said that in the low interest rate environment, institutional funds are seeking more stable sources of income, and the operating performance and cash distribution of rental housing REITs have therefore received attention. The original equity holders can use issuance and fundraising to recover construction funds and invest them in new projects.

The expansion documents for Huaxia Beijing Affordable Housing REIT stipulate that the original equity holder intends to use no less than 85% of the net recovered funds for the public rental housing project on the Dongheyan plot in Beigong Town, Fengtai District, the Lijiazhuang No. 4 plot in Fengtai Nanyuan, or other approved rental housing projects.

As of the end of the third quarter, the available rental area of Huaxia Beijing affordable housing REIT was approximately 241500 square meters, with a rental rate of 96.36%, an increase of 0.84 percentage points compared to the same period in 2025; The rental collection rate is 96.47%. The profit distribution regulations stipulate that the annual cash distribution amount shall not be less than 90% of the available distribution amount.

(Author Tian Guobao)