1. Report Industry Investment Rating No information provided in the given content. 2. Core Viewpoints of the Report - This week, the external market environment fluctuated sharply. REITs first rose and then fell, similar to the bond market trend. The warehousing sector declined significantly due to short - term negative news. The primary market welcomed the first new product issuance in 2026, and the Dongfanghong Tunnel Expressway REIT released an inquiry announcement. Tianhong Consumer REIT withdrew its application, and Xinghe Commercial Real Estate REIT was accepted. Some high - speed REITs disclosed February operating data, with most showing significant growth in traffic volume [3]. - As of March 20, 2026, 20 REITs have been successfully issued since 2025. This week, 8 first - issue public REITs and 1 expansion - offering REIT made new progress. The current approval process includes 32 first - issue and 4 expansion - offering REITs at different stages [3]. - This week, the CSI REITs Total Return Index closed at 1021.78 points, down 0.13%, outperforming the CSI 300 by 2.05 percentage points and the CSI Dividend by 2.92 percentage points. Property - type REITs fell 0.33%, while franchise - type REITs rose 0.41%. In terms of asset types, the affordable housing, transportation, data center, and environmental protection and water services sectors performed well [3]. - In terms of liquidity, the average daily turnover rates of property - type and franchise - type REITs decreased, and the trading volumes also declined week - on - week. The data center sector was the most active [3]. - In terms of valuation, the yields of property - type and franchise - type REITs from ChinaBond valuation are 4.02% and 4.87% respectively, with the transportation, warehousing and logistics, and park sectors ranking among the top [3]. 3. Summary According to the Directory 3.1 Primary Market: 8 First - Issue Public REITs Made New Progress - Since 2025, 20 REITs have been successfully issued, with a total issuance scale of 40.3 billion yuan. This week, 8 first - issue public REITs made new progress, including the withdrawal of Zhonghang Tianhong Consumer REIT, feedback on several REITs, and the acceptance and registration of others. One expansion - offering REIT, CICC Xiamen Anju REIT, was registered and became effective [3][15][16]. 3.2 Secondary Market: Liquidity Decreased This Week 3.2.1 Market Review: The CSI REITs Total Return Index Fell 0.13% - The CSI REITs Total Return Index closed at 1021.78 points, down 0.13%, outperforming the CSI 300 by 2.05 percentage points and the CSI Dividend by 2.92 percentage points. Property - type REITs fell 0.33%, and franchise - type REITs rose 0.41%. In terms of asset types, the affordable housing (+0.98%), transportation (+0.67%), data center (+0.10%), and environmental protection and water services (-0.05%) sectors performed well [3]. 3.2.2 Liquidity: Both Turnover Rate and Trading Volume Decreased - The average daily turnover rates of property - type and franchise - type REITs were 0.31% and 0.28% respectively, down 5.05 and 7.36 basis points from last week. The trading volumes were 333 million and 94 million shares respectively, down 14.15% and 20.81% week - on - week. The data center sector was the most active [3][27]. 3.2.3 Valuation: The Affordable Housing Sector Had a Higher Valuation - The yields of property - type and franchise - type REITs from ChinaBond valuation were 4.02% and 4.87% respectively. The transportation (5.97%), warehousing and logistics (5.72%), and park (4.84%) sectors ranked among the top [3][29]. 3.3 This Week's News and Important Announcements - **News**: During the Two Sessions, a representative proposed to include REITs in the inter - connectivity to activate the Hong Kong REITs market. Guangdong Hongchuan Smart Logistics plans to issue a REIT with its infrastructure assets. Jinan Urban Development Group's rental housing REIT service procurement project is open for bidding. Shaanxi's Huashan Scenic Area REIT is about to be issued [35]. - **Announcements**: Several high - speed REITs disclosed February operating data, including traffic volume and toll revenue. Some REITs also issued解禁 announcements [36].

Core Viewpoint - The article discusses the potential inclusion of REITs in the mutual market connectivity between Hong Kong and mainland China, which is expected to enhance liquidity in the Hong Kong REITs market and attract mainland investors [2][9]. Group 1: Performance of Hong Kong REITs - Recent financial disclosures indicate that Hong Kong REITs are facing challenges due to a downturn in the retail sector, with many reporting declines in revenue and distributable income [4][5]. - For instance, Link REIT (00823.HK) reported a revenue of HKD 7.023 billion, a slight decrease of 1.8% year-on-year, and a total distributable amount of HKD 3.283 billion, down 5.6% [4]. - Other REITs, such as Prosperity REIT (00778.HK) and Champion REIT (02778.HK), also experienced declines in total revenue and distributable income, with decreases of 3.7% and 9% respectively [5]. Group 2: Financing Costs and Market Conditions - Despite the overall decline in performance, the reduction in financing costs has provided some support for REITs' earnings. The average interest rate for Yuexiu REIT (00405.HK) fell to 3.77%, a decrease of 76 basis points year-on-year [7]. - The financing cost for Prosperity REIT has dropped to 3.5%, which has helped offset the decline in net property income [7]. - The overall trend shows that lower financing costs are crucial for REITs, as they are required to distribute at least 90% of their annual income to shareholders [6]. Group 3: Future Outlook and Mutual Connectivity - The announcement by the China Securities Regulatory Commission to include REITs in the Stock Connect program has generated significant interest, with expectations of improved market liquidity and valuation for Hong Kong REITs [9][10]. - Currently, there are 11 REITs listed in Hong Kong, with a total market capitalization of HKD 142.7 billion, indicating a robust market that could benefit from increased participation from mainland investors [9]. - The inclusion of REITs in the mutual connectivity framework is seen as a major breakthrough that could solidify Hong Kong's status as an international financial center and enhance market activity [10].

Core Viewpoint - Link REIT, set to be listed in Hong Kong in 2025, has established itself as a leading real estate investment trust (REIT) in Asia through steady growth in its rental business, despite facing challenges such as the 2008 financial crisis, global trade tensions, and the COVID-19 pandemic [1] Group 1: Company Overview - Link REIT is the first REIT listed in Hong Kong, having taken over 180 retail properties and parking assets from the Hong Kong Housing Authority since its inception in 2005 [2] - The company has successfully renovated its properties, enhancing energy efficiency and modernizing facilities, which has led to an average investment return rate of 18% for over 100 asset enhancement projects completed [2][3] - As of March 31, 2025, Link REIT's property assets have increased to 154, with a total valuation exceeding HKD 220 billion, representing a 5.7 times growth since its listing [3] Group 2: Market Position and Strategy - Link REIT's property portfolio is diversified, covering retail properties, parking lots, office buildings, and logistics across five global markets, which helps stabilize returns during market fluctuations [5] - The core market remains Hong Kong, accounting for 75% of the overall property portfolio, focusing on essential consumer goods, which enhances resilience against market volatility [4] Group 3: Financial Health and Dividend Policy - Link REIT maintains a healthy financial discipline, with net debt ratios and average borrowing costs kept at sustainable levels, earning credit ratings of A2, A, and A from major rating agencies [6] - The company distributes 100% of its distributable income as dividends, consistently exceeding the minimum distribution requirements set by Hong Kong regulators [6] Group 4: Future Growth and Opportunities - The recent regulatory changes in China and Hong Kong are expected to enhance liquidity for REITs, with Link REIT likely to be one of the first beneficiaries of the "mutual access" initiative [8][9] - Link REIT is exploring new growth avenues by developing asset management services, leveraging its 20 years of experience in asset enhancement and management [9]

Group 1: Current Status of Hong Kong REITs Market - The Hong Kong REITs market has faced challenges after a period of rapid growth, with 11 listed REITs currently, and the market is highly concentrated, with Link REIT accounting for over 70% of total market capitalization [2][6][7] - The average daily turnover rate of Hong Kong REITs from 2025 to date is only 0.16%, indicating low liquidity and market activity compared to mainland China [2][12] - The majority of REITs holders are issuers and strategic placement investors, which further reduces market liquidity [12][22] Group 2: Differences Between Domestic and Foreign REITs - Both domestic and foreign REITs can be analyzed using a "numerator-denominator" approach, but there are differences in asset quality and interest rate impacts [3][23] - Hong Kong REITs have more flexible underlying assets, while mainland REITs exhibit more stable cash flows [3][24] - The valuation of Hong Kong REITs is influenced by overseas interest rate cycles, while mainland REITs benefit from a low domestic interest rate environment [3][24] Group 3: Current Situation of Leading Hong Kong REITs - Leading Hong Kong REITs have seen their underlying assets and stock prices pressured by macroeconomic factors, with an average valuation decline of 5% year-on-year expected in 2024 [3][6] - As of the end of August, the average dividend yield (TTM) and price-to-book ratio for Hong Kong REITs are 6.70% and 0.56x, respectively [3][12] - It is recommended to focus on larger market capitalization, better liquidity, and more diversified underlying assets if the mutual connectivity is established [3][6]