Core Viewpoint - Morgan Stanley's report indicates that if the macro environment remains stable and resilient, housing prices in first-tier and major second-tier cities are expected to stabilize in the second half of 2027 [1] Group 1: Company Insights - Morgan Stanley is optimistic about China Resources Land (01109) and New City Holdings (601155.SH) as stable mall operators, benefiting from the emphasis on consumption in the 14th Five-Year Plan and strong policy support for Real Estate Investment Trusts (REITs) [1] - The report also highlights that C&D International (01908) and China Overseas Development (00688) have land reserves that will support their profit margins, driving earnings back to positive growth [1]

Group 1 - The core viewpoint of the article indicates that if the macro environment remains stable and resilient, property prices in first-tier and major second-tier cities are expected to stabilize in the second half of 2027 [1] - Morgan Stanley is optimistic about China Resources Land (01109) and New World Development (601155.SH) as stable mall operators benefiting from the emphasis on consumption in the 14th Five-Year Plan and strong policy support for Real Estate Investment Trusts (REITs) [1] - The report also favors C&D International (01908) and China Overseas Land & Investment (00688), noting that their land reserves will support profit margins and drive earnings back to positive growth [1]

Core Viewpoint - Brookfield Asset Management and GIC have proposed to acquire National Storage REIT for an estimated valuation of AUD 4.02 billion, indicating a significant interest in the self-storage sector in Australia [1][2]. Group 1: Acquisition Details - The proposed acquisition offers investors AUD 2.86 per share, leading to a 19% increase in National Storage's stock price, closing at AUD 2.70 [1]. - National Storage has allowed the bidders to conduct exclusive due diligence until December 7, aiming to reach a binding agreement by that date [1]. - National Storage operates over 270 storage centers across Australia and New Zealand, making it the largest self-storage provider in Australia [1]. Group 2: Market Context - The potential acquisition could revitalize transaction activity in Australia, which has seen a decline in significant deals, including BHP's failed attempt to acquire Anglo American for USD 43 billion [1]. - The total merger and acquisition activity involving Australian companies has dropped to approximately USD 70 billion, a 30% decrease compared to the same period in 2024 [1]. Group 3: GIC's Position - GIC, one of the largest sovereign wealth funds globally, is estimated to manage assets worth USD 936 billion, although it has not publicly disclosed its asset management scale [2]. - GIC indicated in July that real estate valuations might be bottoming out, presenting attractive investment opportunities [2].

Core Insights - The REITs market is seen as a significant opportunity for the commercial real estate sector in China, which is currently undergoing a transformation [1][8] - Despite having a leading number of REITs, the scale of China's public REITs market is still in its infancy compared to global standards [2][3] Group 1: Market Overview - As of November 7, 2025, China has issued 77 public REITs with a total issuance scale of 198.1 billion yuan, indicating rapid growth in quantity [2] - The number of issued REITs in China surpasses the combined total of Singapore and Hong Kong, showcasing strong market momentum [3] Group 2: Challenges Faced - The public REITs market in China faces challenges such as insufficient supply of quality assets and low efficiency in project execution [4] - Current tax policies increase the cost of asset issuance, discouraging original equity holders from launching REITs [4][5] - The lengthy and complex approval process for REITs contributes to low project execution efficiency, leading to delays [4][6] Group 3: Asset Management and Utilization - The use of proceeds from REITs is restricted by regulations, which can complicate investment decisions for state-owned enterprises [6] - Successful examples of private REITs, such as the one issued by Yuexiu Group, demonstrate the potential for asset revitalization without the lengthy public listing process [7] Group 4: Future Outlook - The REITs market is anticipated to play a crucial role in the future of the real estate market, although its full potential is not yet clear [8] - The development of REITs requires careful attention to market volatility, asset performance, and management capabilities to ensure long-term success [9]

Summary of C-REITs Conference Call Industry Overview - The Chinese real estate industry is transitioning from new residential construction to rental asset operations, coinciding with the development of the REIT market, which may reshape the competitive landscape for developers and redefine long-term investment logic in the sector [1][3][11]. Key Points Importance of Current Developments - Since Q3 2025, favorable policies have accelerated the issuance of domestic REITs (C-REITs), expanding the range of assets and issuing entities. C-REITs are expected to become a significant asset class over the next 10 to 20 years, with a market potential of approximately $1 trillion, which is over 30 times the current size [3][9]. - The limited trading volume of C-REITs suggests that listed developers are a good entry point into this rapidly expanding theme due to their large rental asset portfolios and low participation in REIT issuance [3][9]. Beneficiaries - In-depth analysis indicates that China Resources Land (1109.HK) has the highest short-term benefit potential, followed by Seazen Holdings (601155.SS) and Longfor Group (0960.HK), due to their substantial shopping center portfolios and high pledge ratios. Other companies like China Overseas Land & Investment (0688.HK), China Merchants Shekou (001979.SZ), Vanke (2202.HK), Poly Developments (600048.SS), and Gemdale (600383.SS) also have significant non-retail rental assets that could benefit in the medium term as REIT coverage expands [4][9]. Signals to Watch - The normalization of REIT issuance, especially with private developers' participation, the expansion of covered commercial asset types, and increased flexibility in capital recycling will strengthen confidence in the mid-term investment logic [4][9]. Regulatory Framework and Market Development - C-REITs have a more stringent regulatory framework compared to mature markets like the US and Japan, including requirements on structure, holding ratios, leverage levels, and initial yield [15][19]. - The development of C-REITs has progressed through four phases over the past 25 years, with significant milestones including the first public REITs listed in 2021 and the expansion of eligible asset types [11][12]. Market Size and Performance - As of September 2025, there are 75 publicly listed C-REITs with a total issuance size of approximately RMB 200 billion and a market capitalization of about RMB 220 billion. Despite significant growth since the first listings, C-REITs currently represent only 0.15% of the total market capitalization of China's stock market [20][29]. - The average trading yield of C-REITs has compressed to 4.4%, reflecting a price increase of about 10% since IPOs, with specific sectors like water facilities and new infrastructure seeing substantial price increases [21][40]. Long-term Potential - The potential market size for C-REITs could reach between $800 billion to $1 trillion, which is 28 to 33 times the current market size, driven by the growth of commercial REITs and the completion of new properties [41][43]. - The estimated total value of commercial properties completed since 2000 is approximately $4.9 trillion, indicating a significant opportunity for C-REITs to capture a larger market share in the future [41][42]. Conclusion - The C-REIT market in China is poised for significant growth, driven by favorable policies, a shift in investment focus, and the potential for substantial market capitalization increases over the next decade. Developers with large rental portfolios are well-positioned to benefit from this emerging asset class [3][4][9].

Economic Outlook - Hong Kong's GDP growth is projected to be between 2% and 3% for the year [3] Infrastructure Development - The construction of the Hung Hom Station and the Hong Kong North Station is progressing rapidly, with completion expected in 2027 and 2030 respectively [5] - The establishment of the "Northern Metropolis Development Committee" aims to accelerate the development of the Northern Metropolis [7] Financial Market Initiatives - Hong Kong will collaborate with exchanges in the Greater Bay Area to explore new businesses in bulk commodity trading and carbon trading [8] - The Hong Kong Securities and Futures Commission is promoting the inclusion of Real Estate Investment Trusts (REITs) in the "Stock Connect" program [12] Industry Development - A budget of HKD 1 billion has been allocated to establish the "Hong Kong Artificial Intelligence Research Institute" next year [11] - The government is actively fostering emerging industries such as renewable energy, AI, and data science [11] - Plans are in place to attract more pharmaceutical companies to set up operations in Hong Kong [11]

Core Viewpoint - Despite a gradual recovery in real estate securities following earlier price adjustments, risks from U.S. trade policies and uncertainties surrounding Federal Reserve interest rate cuts continue to exert pressure on future growth [1] Growth Drivers - Resilient income levels: Real Estate Investment Trusts (REITs) tend to perform relatively stable in trade dispute or tariff-dominated market environments due to their focus on local demand and defensive characteristics, along with long-term leases that naturally hedge against inflation [3] - Solid fundamentals: Limited new project supply leads to supply-demand imbalances, supporting property valuations and rental levels [4] - Structural growth trends: Shortages in the residential market drive up rents for tiered units and senior housing, while digitalization trends such as e-commerce and artificial intelligence boost demand for logistics facilities (e.g., industrial properties, cold chain storage) and data centers [4] - Strong potential for valuation recovery: Historical data shows that when U.S. 10-year Treasury yields are between 3% and 5.25%, REITs often outperform the overall stock market, indicating potential for valuation recovery as interest rate expectations remain high [4] - Increased merger and acquisition activity potential: Attractive valuations combined with improving fundamentals encourage more private equity funds to participate in the REIT market, with a low-interest environment still favoring M&A transactions even if the Federal Reserve delays rate cuts [4] Investment Opportunities - The Asia-Pacific real estate sector exhibits relatively high defensiveness amid market volatility caused by trade policies and concerns over global economic growth, contrasting with the negative impacts on export-oriented industries [6] - In Japan, market concerns and political uncertainties threaten economic growth, suggesting that the Bank of Japan is unlikely to raise interest rates this year [6] - In Australia, if inflation is controlled, the Reserve Bank of Australia is expected to continue lowering policy rates through the remainder of 2025 [6] - Japanese developers benefit from improved shareholder return policies, while Japanese REITs are expected to perform well driven by catalysts in logistics and hospitality sectors [7] - In Australia, residential and retail REITs benefit from strong local consumption and rate cuts [7] - In Singapore, local retail and industrial REITs may have upside potential due to robust dividend growth and low vacancy rates [7] - In Hong Kong, non-essential retail REITs may benefit from low yields and potential interconnectivity arrangements with the mainland Chinese market [7] - Following two years of volatility, a stabilizing macro environment and declining capital costs provide clearer prospects for REITs, with certain sectors and regions showing solid fundamentals and clear long-term growth drivers, presenting attractive entry points for patient long-term investors [7] - Compared to the overall stock market, REITs exhibit lower earnings uncertainty, and a mild interest rate environment amid slowing economic growth favors valuation recovery, suggesting that global REITs may present optimal investment opportunities in a high-growth, low-inflation environment [7]

Core Viewpoint - China Resources Land (01109) reported a 6.9% year-on-year decline in core net profit for the first half of the year, which is largely in line with expectations, benefiting from strong performance in shopping mall and recurring businesses that contributed 60.2% of profits [1] Group 1 - The management holds a positive outlook for sales in the second half of the year, supported by policy backing and increased resources [1] - The company recently set a target to regularly list a Real Estate Investment Trust (REIT), which is expected to have a positive impact on short-term profitability [1] - The target price for China Resources Land has been raised from HKD 32.8 to HKD 34.1, with a "Buy" rating maintained [1]

Core Viewpoint - The H-share market has seen several listed REITs report mid-term performance, with most experiencing a decline in revenue and net property income growth, while the hotel and tourism sectors in mainland China have shown strong performance [1][5]. Group 1: REITs Performance - Most listed REITs reported a decline in revenue and net property income, with specific examples including: - Yuexiu REIT reported total revenue of 966 million RMB, down 6.6% year-on-year, and net property income of 679 million RMB, down 8.6% [3]. - Link REIT achieved revenue of 855 million HKD, down 2% year-on-year, with net property income of approximately 613 million HKD, down 3.2% [3]. - Sunshine REIT reported revenue of 391 million HKD, down 4.8%, and net property income of approximately 307 million HKD, down 5.4% [3]. - SF REIT achieved revenue of approximately 230 million HKD, up 3.4%, and net property income of approximately 192 million HKD, up 6% [3]. Group 2: Sector Analysis - The performance of different property sectors shows challenges: - Office, retail, and logistics sectors continue to face pressure, with declining occupancy rates reported [5][7]. - Yuexiu REIT's overall occupancy rate was approximately 82.2%, down 1.8 percentage points year-on-year [6]. - Sunshine REIT's overall occupancy rate was 89.2%, down about 2 percentage points from the beginning of the period [6]. - Conversely, the hotel and tourism sectors have performed well, with notable revenue increases: - Guangzhou IFC's serviced apartments achieved record revenue of 603 million RMB, and the Four Seasons Hotel in Guangzhou reported record room revenue of 190 million RMB, with an average occupancy rate of 80.1%, up 1.1 percentage points year-on-year [7]. Group 3: Market Outlook - The inclusion of REITs in the Shanghai-Hong Kong Stock Connect is seen as a significant breakthrough for capital market connectivity, potentially enhancing market activity and liquidity [1]. - The financing costs for several REITs have decreased, which may alleviate pressure on distributable income: - Yuexiu REIT reported a financing cost of 403 million RMB, down 13.5% year-on-year [8]. - Sunshine REIT's weighted average financing cost decreased from 4.2% to 3.7% year-on-year [8]. - Link REIT's financing cost decreased by 12.6% to 173 million HKD [8].

Core Viewpoint - Yuexiu Real Estate Investment Trust (00405.HK) reported strong half-year results for 2025, with total operating income of 966 million RMB and a net property income of 679 million RMB, achieving an overall occupancy rate of 82.2% [2][4]. Group 1: Financial Performance - The total operating income for the first half of 2025 was 966 million RMB, with a net property income of 679 million RMB [2]. - The operating income from office properties contributed 55% of total revenue, amounting to 532 million RMB, with a new signed area of 48,822 m², reflecting a year-on-year growth of 7.5% [2]. - The financing cost decreased by 13.5% year-on-year, saving 63 million RMB, with the average financing cost reaching a near three-year low [4]. Group 2: Segment Performance - Hotel and apartment revenue accounted for 26% of total income, with Guangzhou IFC Ascott serviced apartments achieving record revenue of 60.3 million RMB due to increased occupancy rates [3]. - The Guangzhou Four Seasons Hotel capitalized on foreign high-net-worth clientele, generating 190 million RMB in room revenue, with an average occupancy rate of 80.1%, up by 1.1 percentage points year-on-year [3]. - The Guangzhou White Horse Clothing Market reported an operating income of 109 million RMB, maintaining a 95% occupancy rate, and facilitated procurement worth 140 million RMB [3]. Group 3: Strategic Initiatives - The fund's management has actively optimized its financial structure, increasing the proportion of RMB financing to 72%, up by 31 percentage points year-on-year [4]. - In July 2023, the fund successfully issued 600 million RMB in three-year Panda bonds at a low interest rate of 2.70%, marking a significant milestone as the first listed REITs Panda bond issuance globally [4]. - Looking ahead to the second half of 2025, the fund aims to enhance asset value and maintain high-quality development amidst external uncertainties [4].