Research On Factors Influencing The Discount Or Premium Rates Of Infrastructure Public REITs

The listing and trading of China’s first 9 infrastructure public REITs,including CICC Pros REIT,in the form of contractual closed-end funds in June 2021 officially marks the birth of a new model of infrastructure investment and financing in China and the birth of China’s public REITs market,which is of great significance to the enrichment of China’s capital market and infrastructure reform.After that,the secondary market of REITs has a strong response,all of which are issued at a premium.But then there is a large and frequent fluctuation for discount or premium rate of REITs,which not only increases the difficulty of fund operation,but also shakes investors’ confidence and hinders the cultivation of highquality REITs market.Therefore,the factors affecting the discount or premium rate of REITs become the common concern of fund managers and investors.In September 2022,CICC Pros REIT announced that it has applied for fund expansion,marking the start of a two-wheel driving pattern of "product launch" and "fund expansion" for Chinese REITs.CICC Pros REIT has the highest share of strategic placement among the 25 REITs that have been listed so far,as well as the largest issuance scale and the largest amount of underlying assets among the 3 warehousing logistics REITs that have been listed,which are in an industry that is facing financing difficulties.In addition,CICC Pros REIT was one of the first batch of public infrastructure REITs with the most stable discount premium rate,and there was no discount in nearly a year.Therefore,this paper takes CICC Pros REIT as the case study object to explore the factors affecting the discount or premium rate of domestic infrastructure REITs,in order to provide case enlightenment for REITs investors and financiers to predict the discount or premium trend of REITs products,and relevant regulatory authorities to stabilize the secondary market of REITs,as well as new ideas for effective financing of domestic warehousing and logistics enterprises.Then,this paper makes an empirical analysis of the factors affecting the discount or premium rate of CICC Pros REIT and draws a conclusion.The operating scale,rental rate,turnover rate of underlying assets and the yield rate of the bond market are proportional to the discount or premium rate of CICC Pros REIT.The profitability of underlying assets,the remaining days of the closed term,the yield rate of the stock market and the yield rate of AA corporate bonds(three-year)are inversely proportional to the discount or premium rate of CICC Pros REIT.Moreover,the rental rate of underlying assets plays the biggest role in explaining the change of discount or premium rate of CICC Pros REIT.Finally,this paper focuses on the case analysis of the location,scale,warehousing type and leasing of underlying assets,and believes that the reason for the stable discount premium rate of CICC Pros REIT is closely related to the scattered distribution of tenants’ industries,low concentration of tenants,and high completion degree of operating income and amount available for distribution.As for the phenomenon that the premium range of CICC Pros REIT is lower than that of Hongtuyantian REIT,this paper believes that it is because the high-standard warehouse and bonded warehouse of CICC Pros REIT account for a lower proportion,and these two have the functions of improving efficiency and reducing tax burden respectively.In addition,the strategic placement share of CICC Pros REIT is the highest among equity REITs,so the discount premium rate changes more stable.The implications and suggestions of this paper are as follows:when investing in REITs products,investors should focus on the operation of underlying assets and the industry they are in,instead of following others blindly.When making investment analysis,investors can refer to the turnover rate,bond market yield and the operation scale of the underlying asset.When investing in equity REITs,investors can refer to the yield of AA corporate bond(three-year).At the same time,fund managers,intermediaries and other participants should reasonably estimate the amount available for distribution in the next two years when declaring REITs products.The regulatory authorities should also check prudently.What is more,investors in the primary market should make rational inquiry.