1. Report Industry Investment Rating There is no information provided regarding the industry investment rating in the document. 2. Core View of the Report - In July 2025, the REITs index fluctuated and corrected, with the consumption sector showing steady performance. The dividend - payout ratio spread between REITs and CSI Dividend narrowed, and the dividend - payout ratios of transportation and rental housing for guaranteed occupancy increased. Guojun Lingang REIT's expansion will increase the distribution ratio in 2025. The first - time issuance of data center REITs saw a narrowing of the first - day listing gains [4]. 3. Summary by Relevant Catalogs 3.1 REITs Index Fluctuated and Corrected, Consumption Sector Showed Steady Performance - **Index Performance**: In the second half of July, the CSI REITs (closing) index and CSI REITs Total Return Index fell by 0.4%/0.2% cumulatively. In the last week of July, as the 10 - year Treasury yield and the stock market both fluctuated and declined, the REITs market regained its upward momentum. Since the beginning of 2025, the CSI REITs (closing) index and CSI REITs Total Return Index have risen by 10.4%/13.9% cumulatively, outperforming the CSI 300 Index [4][9]. - **Sector Performance**: - Consumption sector: It has maintained an upward trend for 7 consecutive months, with an average increase of 1.81% in July, and the number of rising REITs accounted for 67% [4][13]. - Ecological and environmental protection sector: The turnover rate reached 1.27% (month - on - month increase of 0.35 pct), with some individual REITs rising and some falling [4][17]. - Industrial park and warehousing logistics sectors: They have risen for 3 consecutive months, but the average increase has shown a narrowing trend [4][13]. - Transportation sector: It fell for the first time since 2025, with an average decline of 0.75%, and the number of falling REITs accounted for more than half [4][13]. - Rental housing for guaranteed occupancy and water conservancy facilities sectors: They corrected for the first time after rising for 4 consecutive months, with an average decline of 1.95%/1.49% in July [4][13]. - Energy sector: It had the deepest decline in July, with an average decline of 2.94% [4][13]. - **Dividend - Payout Ratio**: As of July 31, 2025, the average TTM dividend - payout ratios of equity - type and concession - type REITs were 3.72%/7.16% respectively. Among equity - type REITs, warehousing logistics and industrial parks had relatively high dividend - payout ratios, while rental housing for guaranteed occupancy had a relatively low but increasing ratio. Among concession - type REITs, transportation REITs' leading advantage in dividend - payout ratio further expanded [4][20]. - **Valuation**: For concession - type REITs, the energy sector had a relatively high valuation, while the transportation sector had an attractive IRR. For equity - type REITs, the industrial park sector's IRR returned to the historical central level [21][25]. 3.2 Guojun Lingang REIT's Expansion, Distribution Ratio in 2025 to Increase - **Expansion Plan**: On July 29, 2025, Guojun Lingang Industrial Park REIT announced an expansion plan, with a proposed issuance share limit of 446.1 million shares and a proposed fundraising of no more than 1.7235 billion yuan. The expansion asset is the Kangqiao project, with an evaluation value of 1.532 billion yuan, a 69.19% increase compared to the book value [4][37]. - **Distribution Ratio Forecast**: After the expansion, the predicted distributable amounts for the period from April - December 2025 and 2026 are 82.52 million yuan and 110.6 million yuan respectively. With a fundraising of 1.7235 billion yuan, the predicted distribution ratios for 2025 and 2026 are 4.11%/4.15%, and the 2025 distribution ratio is 0.39 pct higher than before the expansion [4][37]. 3.3 First - Time Issuance of Data Center REITs, Narrowing of First - Day Listing Gains - **New Issuance**: In July 2025, two data center REITs were issued for the first time, enriching the underlying asset types of REITs. The number of offline inquiry institutions reached a new high, but the effective subscription multiple decreased due to the large issuance scale of the new projects, and the配售 ratio increased slightly to 0.6% [4]. - **Market Performance**: Affected by the secondary - market adjustment, the two REITs listed in July did not trigger the daily limit, with an average first - day closing increase of 24.2%. From January to July 2025, the offline total returns for 0.5/1 billion yuan of funds were 1.4214 million yuan/2.8428 million yuan, with a return rate of 2.84%. The three REITs with the first - time strategic placement unlocking in July all had positive returns, with an average unlocking return rate of 46.39%. There are currently 11 first - time issuance REITs projects in the queue [4].

Investment Rating - The report suggests a positive outlook on the real estate sector, particularly focusing on the potential of asset-backed securities and public REITs as investment opportunities [3][4]. Core Insights - The asset-backed securities (ABS) market in China has surpassed 3 trillion yuan, indicating its significance in the capital market. The growth in public REITs is expected to provide better exit channels for real estate companies, especially those with substantial real estate holdings [2][3][27]. - The report emphasizes the advantages of real estate as a suitable asset for securitization due to its inherent rental properties that generate stable cash flows and potential for appreciation [13][14]. Summary by Sections 1. Asset Securitization Overview - Asset securitization has evolved into a crucial financing tool in China's capital market, with a focus on transforming illiquid assets into liquid securities [13][14]. - The report categorizes standardized asset securitization products into credit ABS, corporate ABS, and asset-backed notes (ABN), highlighting the differences in regulatory oversight and asset types [25][26]. 2. Market Scale and Growth - As of May 2025, the total scale of asset securitization products in China reached 3.09 trillion yuan, accounting for 6.2% of the total bond market [27][29]. - The issuance of asset securitization products saw a significant increase in 2024, with 2,085 products issued, totaling 1.98 trillion yuan, marking a year-on-year growth of 6.7% [36][38]. 3. REITs Development - The report outlines the development of REITs in China, noting the transition from initial trials to a more structured and regular issuance process, with a total of 66 public REITs issued by May 2025, amounting to approximately 1744 billion yuan [19][21][22]. - The expansion of REITs into various sectors, including rental housing and commercial real estate, is highlighted as a significant opportunity for real estate companies to optimize their asset management and liquidity [3][19]. 4. Investment Recommendations - The report recommends focusing on companies with stable and mature asset portfolios in the long-term rental apartment and commercial real estate sectors, such as China Resources Land, China Overseas Development, and Longfor Group [3][4].

Group 1 - The enthusiasm for REITs products among fund companies has significantly increased this year, with a notable acceleration in the launch of public REITs products, as many new products have recently been approved for issuance [1][2] - As of June 25, 2023, a total of 10 new REITs products have been launched this year, with a combined issuance scale exceeding 13 billion yuan, and the total market value of listed REITs products has surpassed 200 billion yuan [2][4] - The number of public institutions participating in the REITs market has grown, with 24 public institutions (including securities asset management) involved in the layout of REITs products [2][3] Group 2 - Leading public fund companies, such as Huaxia Fund and Zhongjin Fund, have been actively launching REITs products, with Huaxia Fund having the highest number of listed products at 14 [3][4] - Various listed companies are increasingly using their assets as underlying projects for issuing REITs products, indicating a diversification of market participants [3][4] - The REITs market is seen as a vital tool for empowering the real economy, with the scope of REITs products expanding to include various sectors such as shopping malls, agricultural product trading centers, and cultural tourism projects [4][6] Group 3 - The issuance of REITs products is providing new exit strategies for early-stage investments by venture capital institutions and local governments, helping to alleviate fiscal pressures [4][6] - The funds raised from REITs issuance are being utilized for various purposes, including debt repayment, asset-light transformation, and promoting new project development [6] - The secondary market performance of REITs products has been strong, with only one out of 66 listed funds declining in value this year, and half of the funds showing an increase of over 20% [6]

Core Viewpoint - The public REITs market in China has surpassed 150 billion yuan in issuance, evolving into a dual-driven model of "initial issuance + expansion" and becoming a crucial financial tool for revitalizing existing assets and supporting the real economy [1] Group 1: Business Background - The public REITs market has expanded to over 10 asset types, with a significant focus on infrastructure projects [1] - The issuance of public REITs has entered a normalization phase following the release of government notifications aimed at promoting regular issuance [1] - Infrastructure public REITs typically adopt a "debt structure" to establish cash flow, ensuring regular distribution of distributable amounts to investors [2] Group 2: Tax Observations - Current regulations regarding corporate income tax interest expense deductions are influenced by the commercial rationale and the interest rate levels of the debt structure [3] - Tax authorities may question the commercial rationale of interest expenses and their relevance to the company's operations [2] - There is a lack of uniformity among tax authorities regarding the recognition of "financial enterprises' same-type loan rates," leading to potential disputes over interest expense deductions [2] Group 3: VAT and Property Tax - The new VAT law will take effect on January 1, 2026, but there is uncertainty regarding the tax rate for "old projects" and the transition from existing VAT regulations [4] - The public REITs market is experiencing downward trends in rental income due to economic fluctuations, which may impact property tax calculations and actual tax burdens [5][6] - Changes in property tax calculation methods could introduce compliance risks and affect cash flow distributions for project companies [8] Group 4: Income Tax Considerations - Public funds and special plans are not subject to corporate income tax, but income distributed to investors is subject to taxation based on their legal status [9] - Different tax regulations apply to corporate and individual investors regarding dividend income and capital gains from fund share transfers [10] - Continuous monitoring of tax policy changes is essential for managing tax risks associated with public REITs and their multi-layered structures [10]

Group 1 - The development of C-REITs has progressed through three phases: exploration and cultivation (2004-2019), pilot phase (2020-2024 H1), and normalization phase (2024 H2 onwards) [1][9] - The C-REITs market has seen a total of 65 listed REITs with a total market value of 190.9 billion as of April 21, 2025, with the top three asset types being transportation infrastructure (32%), park infrastructure (16%), and consumer infrastructure (16%) [9][14] - The regulatory framework for C-REITs has evolved to include a multi-department collaboration model, with the National Development and Reform Commission (NDRC) overseeing project compliance, the China Securities Regulatory Commission (CSRC) managing product registration, and exchanges ensuring listing and information disclosure [2][20] Group 2 - The issuance process for C-REITs consists of four main stages: preparation, application and review, registration and issuance, and listing management, with a focus on improving efficiency and ensuring investor protection [3][19] - The normalization phase aims to shift from "scale expansion" to "quality improvement," optimizing the market ecosystem and promoting a multi-tiered REITs market system [4][22] - The NDRC has expanded the asset scope for C-REITs to include 12 categories, enhancing the flexibility of fund usage while prohibiting the use of recovered funds for residential development projects [4][24]