Core Viewpoint - The REITs market has accelerated its decline recently, particularly in operating rights projects, with a drop of nearly 10% since last week, primarily due to concerns over the accounting treatment of REITs dividends and principal, rather than the fundamental performance of the assets [1][5]. Market Performance - The China Securities REITs Total Return Index experienced fluctuations, with an intraday drop exceeding 1%, ultimately closing down 0.83% at 983.81 points, marking a new low since January 9 of this year [1]. - The index has recorded a continuous decline for seven trading days, with a total drop of 4.35% since last week [1]. REITs Project Performance - The REITs projects that have seen the largest declines since December 15 include: - Huaxia Yuexiu Expressway REIT: -9.59% (Toll Road) - Harvest China Power Construction Clean Energy REIT: -9.54% (New Energy) - Huatai Jiangsu Traffic Control REIT: -9.35% (Toll Road) [2]. Accounting Treatment Concerns - The recent decline is attributed to heightened market concerns regarding the OCI account's treatment of REITs dividends and principal, leading to emotional and risk-averse selling, particularly in operating rights REITs [1][5]. - The China Securities Regulatory Commission is set to release guidelines clarifying the equity nature of infrastructure REITs, which will affect how investments in REITs are reported [3]. Long-term Outlook - Analysts believe that the current discussions around the accounting treatment of REITs dividends and principal are primarily influenced by year-end investment assessments, suggesting limited long-term impact on the market [4][5]. - After the recent downturn, the market valuation has gained more safety margins, and the public REITs market in China remains in a policy dividend period, indicating potential opportunities for low-cost allocations in fundamentally stable projects [5].

Investment Rating - The industry investment rating is maintained as "Positive" [2][5] Core Views - The REITs market experienced a weekly pullback across all sectors, but the issuance market remains active. The China Securities REITs (closing) index was 773.15, down 1.66% year-on-year and down 3.06% month-on-month. The China Securities REITs total return index was 999.19, up 5.09% year-on-year but down 2.85% month-on-month. The trading volume for the REITs market reached 521 million shares, a year-on-year decrease of 30.99%, with a transaction value of 2.302 billion yuan, down 20.73% year-on-year [5][7][28]. Summary by Sections Market Review - The China Securities REITs (closing) index decreased by 3.06% month-on-month, with a year-to-date increase of 2.21%. The index has underperformed the CSI 300 index, which has increased by 33.14%, resulting in an excess return of -30.93% [16][21]. Weekly Tracking - The REITs market trading volume for the week was 521 million shares, down 30.99% year-on-year, and the transaction value was 2.302 billion yuan, down 20.73% year-on-year. The turnover rate for the week was 1.95%, a decrease of 2.66 percentage points year-on-year [28][32]. Sector Performance - Weekly performance for various REITs sectors showed declines: affordable housing REITs down 4.31%, environmental REITs down 0.96%, highway REITs down 5.20%, industrial park REITs down 1.62%, warehousing and logistics REITs down 1.40%, energy REITs down 3.13%, and consumer REITs down 2.02%. Monthly performance also reflected declines across these sectors [39][56]. Issuance Tracking - There are currently 14 REITs funds awaiting listing, with the issuance market remaining active. Notable applications include the Huatai Sanxia Clean Energy REIT and the E Fund Guangxi Beitou Highway REIT [8][60].

1. Report Industry Investment Rating - No industry investment rating information is provided in the report. 2. Core Viewpoints of the Report - This week, the China Securities REITs Index declined by 3.1% throughout the week. After the departure of irrational premium and speculative funds in the early stage, the year - to - date return of the China Securities REITs Index turned negative (-2.1%). As emotional pricing fades, prices are gradually anchored to the cash flow and distribution ability of underlying assets, significantly enhancing the safety margin. From the comparison of weekly returns of major indices, CSI Convertible Bond Index > CSI Aggregate Bond Index > CSI 300 Index > China Securities REITs Index. As of December 19, 2025, the dividend yield of equity - type REITs is 80BP lower than the average dividend yield of CSI Dividend Stocks, and the spread between the average internal rate of return of concession - type REITs and the 10 - year Treasury yield is 367BP [1]. 3. Summary by Relevant Catalogs 3.1 Secondary Market Trends - **Index Performance**: As of December 19, 2025, the closing price of the China Securities REITs (closing) Index was 773.15 points, with a weekly decline of 3.1% from December 15 - 19, 2025, performing worse than the CSI Convertible Bond Index (+0.5%), the CSI Aggregate Bond Index (+0.1%), and the CSI 300 Index (-0.3%). Year - to - date, the performance order of major indices is: CSI Convertible Bond Index (+17.1%) > CSI 300 Index (+16.1%) > CSI Aggregate Bond Index (+0.6%) > China Securities REITs Index (-2.1%). In the past year, the return of the China Securities REITs Index was -0.7%, with a volatility of 7.5%. Its return was lower than that of the CSI 300 Index, the CSI Convertible Bond Index, and the CSI Aggregate Bond Index; its volatility was lower than that of the CSI 300 Index and the CSI Convertible Bond Index but higher than that of the CSI Aggregate Bond Index [2][6]. - **Market Capitalization and Turnover**: On December 19, the total market capitalization of REITs was 214.1 billion yuan, a decrease of 3.5 billion yuan from the previous week. The average daily turnover rate for the whole week was 0.39%, an increase of 0.02% from the previous week [2][9]. - **Performance by Type**: From the perspective of different project attributes, the average weekly returns of equity - type REITs and concession - type REITs were -2.1% and -4.0% respectively. All types of REITs closed down, with transportation, water conservancy facilities, and municipal facilities REITs experiencing the largest declines. The two REITs with the largest weekly increases were Hua'an Waigaoqiao REIT (+1.34%) and Boshi Jinkai Industrial Park REIT (+0.08%), while the rest of the REITs declined this week [3][13][15]. - **Trading Activity**: Among different project types, water conservancy facilities REITs had the highest average daily turnover rate during the period, with an average daily turnover rate of 0.9%. Transportation infrastructure REITs had the highest trading volume proportion this week, accounting for 25.9% of the total REITs trading volume. The top three REITs in terms of net inflow of main funds were Southern Runze Technology Data Center REIT (7.45 million yuan), Huatai Jiangsu Expressway REIT (6.71 million yuan), and China Merchants Expressway REIT (4.22 million yuan) [3][18][19]. 3.2 Primary Market Issuance - From the beginning of the year to December 19, 2025, there were 2 REITs products in the accepted stage, 3 in the declared stage, 2 in the inquired stage, 5 in the feedback stage, 6 products that had passed and were waiting for listing, and 15 newly - listed first - issue products on the exchange [22]. 3.3 Valuation Tracking - **Valuation Indicators**: REITs have both bond and equity characteristics. As of December 19, the average annualized cash distribution rate of public - offering REITs was 6.20%. From the equity perspective, relative net value premium rate, IRR, and P/FFO are used to judge the valuation of REITs. Different project types have different valuation levels. For example, the relative net value premium rate of affordable rental housing REITs is 40.7%, and the P/FFO is 36.3 [24][26]. - **Comparison with Benchmarks**: As of December 19, 2025, the dividend yield of equity REITs was 20BP lower than the average dividend yield of CSI Dividend Stocks, and the spread between the average internal rate of return of concession - type REITs and the 10 - year Treasury yield was 367BP [28]. 3.4 Industry News - On December 19, China Three Gorges New Energy (Group) Co., Ltd. officially applied for the "Huatai Three Gorges Clean Energy REIT", with the underlying asset being the Dalian Zhuanghe Offshore Wind Power Project. The project has been fully connected to the grid in 2020, and the relevant issuance proposal has been reviewed and approved by the board of directors. The company and its affiliated parties plan to subscribe for 44% of the fund shares in total. - On December 19, the "Huaxia Anbo Warehouse REIT" initiated by foreign - funded enterprise Ambo was successfully listed on the Shenzhen Stock Exchange. The underlying assets of this product are three high - quality logistics and warehousing projects in the core area of the Guangdong - Hong Kong - Macao Greater Bay Area. During the issuance stage, the offline inquiry multiple of this fund reached 235.8 times, and various investors highly recognized the investment value of the project [4][34].

Core Insights - The article emphasizes the importance of a hybrid investment strategy that combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds [1]. Group 1: Investment Strategy - A solid base of classic dividend growth stocks can be complemented with other asset types to create a balanced portfolio [1]. - The hybrid system developed allows for capturing total returns that align with the performance of the S&P 500 [1]. Group 2: Investment Focus - The focus is on high-quality dividend stocks and assets that provide potential for long-term growth and significant income generation [1].

Report Industry Investment Rating - No information provided regarding the report industry investment rating Core Viewpoints of the Report - From December 15 to December 19, 2025, the secondary - market prices of China's listed public REITs showed a continuous daily decline. The weighted REITs index had a weekly return of - 2.74%. Compared with other mainstream asset classes, REITs had relatively poor performance [1][11]. - Both property - right and franchise - based REITs declined, with returns of - 2.05% and - 3.83% respectively. All types of REITs by underlying asset type declined, with the ecological and environmental protection - type REITs having the smallest decline [16][17]. - After excluding the newly - listed Huaxia Anbo Warehouse REIT, 2 REITs rose and 75 declined in the secondary market. The trading volume, turnover, and net inflow of main funds of REITs showed differentiation [20][25][28]. - In the primary market, Huaxia Anbo Warehouse REIT was listed on December 19, 2025, and the project status of 2 REIT products was updated [4] Summary by Relevant Catalogs Secondary Market Price Trends - **At the major asset level**: The secondary - market prices of China's listed public REITs declined continuously. The weekly returns of the CSI REITs (closing) and CSI REITs total return indexes were - 3.06% and - 2.85% respectively, and the weighted REITs index had a return of - 2.74%. Among major asset classes, the return ranking from high to low was convertible bonds > gold > US stocks > pure bonds > A - shares > crude oil > REITs [11]. - **At the underlying asset level**: Property - right and franchise - based REITs both declined, with returns of - 2.05% and - 3.83% respectively. By underlying asset type, ecological and environmental protection - type REITs had the smallest decline, and the top three in terms of return were ecological and environmental protection, warehousing and logistics, and industrial park types, with returns of - 0.94%, - 1.52%, and - 1.82% respectively [16][17]. - **At the single - REIT level**: After excluding the newly - listed Huaxia Anbo Warehouse REIT, 2 REITs rose and 75 declined. The rising REITs were Huaan Waigaoqiao REIT and Boshi Jinkai Industrial Park REIT, with increases of 1.34% and 0.08% respectively. The top three in terms of decline were Huaxia Yuexiu Expressway REIT, Huatai Jiangsu Expressway REIT, and CICC Shandong Expressway REIT, with declines of 7.1%, 6.9%, and 6.5% respectively [20]. Trading Volume and Turnover Rate - **At the underlying asset level**: The total trading volume of public REITs this week was 2.3 billion yuan, and the water conservancy facilities - type REITs had the highest average daily turnover rate during the period. The top three in terms of trading volume were transportation infrastructure, consumer infrastructure, and warehousing and logistics types, with trading volumes of 597 million, 372 million, and 357 million yuan respectively. The top three in terms of average daily turnover rate were water conservancy facilities, new - type infrastructure, and warehousing and logistics types, with rates of 0.89%, 0.68%, and 0.67% respectively [23]. - **At the single - REIT level**: The trading volume and turnover rate of single REITs continued to show differentiation. The top three in terms of trading volume were CICC Puluosi REIT, Huaxia China Communications Construction REIT, and Huaxia Anbo Warehouse REIT, with trading volumes of 24 million, 20 million, and 16 million shares respectively. The top three in terms of trading amount were Huaxia China Communications Construction REIT, Huaxia China Resources Commercial REIT, and Huatai Jiangsu Expressway REIT, with trading amounts of 104 million, 99 million, and 88 million yuan respectively. The top three in terms of turnover rate were Huaxia Anbo Warehouse REIT, CITIC Construction Shenyang International Software Park REIT, and Huatai Nanjing Jianye REIT, with turnover rates of 13.02%, 8.52%, and 5.61% respectively [25]. Net Inflow of Main Funds and Block Trading - **Net inflow of main funds**: The total net inflow of main funds this week was - 1.39 million yuan, indicating a decline in market trading enthusiasm compared with last week. By underlying asset type, the top three in terms of net inflow of main funds were warehousing and logistics, new - type infrastructure, and affordable rental housing types, with net inflows of 6.38 million, 6.29 million, and 5.06 million yuan respectively. At the single - REIT level, the top three in terms of net inflow of main funds were Southern Runze Technology Data Center REIT, Huatai Jiangsu Expressway REIT, and China Merchants Expressway REIT, with net inflows of 7.45 million, 6.71 million, and 4.22 million yuan respectively [28]. - **Block trading**: The total block - trading amount this week reached 169.27 million yuan, a decrease compared with last week. There were block - trading transactions on 5 trading days, with the highest single - day block - trading amount on December 18, 2025, reaching 64.67 million yuan. The top three in terms of block - trading amount were CICC Liandong Science and Technology Innovation REIT, CICC Hubei KeTou Optics Valley REIT, and Huaxia China Communications Construction REIT, with amounts of 39.17 million, 24.78 million, and 20 million yuan respectively, and corresponding average discount/premium rates of 0.06%, - 2.20%, and - 3.23% respectively [30]. Primary Market Listed Projects - As of December 19, 2025, the number of China's public REIT products reached 78, with a total issuance scale of 201.749 billion yuan. By underlying asset type, the transportation infrastructure - type had the largest issuance scale, reaching 68.771 billion yuan, followed by the industrial park infrastructure - type REITs, with an issuance scale of 32.933 billion yuan. - This week, Huaxia Anbo Warehouse REIT was listed on December 19, 2025, with an issuance scale of 2.448 billion yuan and an underlying asset type of warehousing and logistics [34]. Projects to be Listed - According to the project announcements of the Shanghai and Shenzhen Stock Exchanges, there are 20 REITs in the to - be - listed state, including 14 initial - offering REITs and 6 to - be - expanded - offering REITs. - This week, the project status of Huatai Three Gorges Clean Energy Closed - end Infrastructure Securities Investment Fund (initial offering) was updated to "declared", and that of E Fund Guangxi Beitou Expressway Closed - end Infrastructure Securities Investment Fund (initial offering) was updated to "feedback received" [40][41].

Group 1 - The article discusses the expertise of Austin Rogers, a REIT specialist focused on high-quality dividend growth stocks aimed at generating safe and growing passive income streams [2] - The investment philosophy emphasizes a lifelong holding period, prioritizing portfolio income growth over total returns [2] - High Yield Landlord is highlighted as a significant real estate investment community on Seeking Alpha, providing exclusive research and resources for its members [2] Group 2 - The article includes a disclosure indicating that the author holds long positions in several stocks, including AMT, CTRE, REG, DGRO, XLU, AHR, and CDL [3] - It clarifies that the opinions expressed are personal and not influenced by compensation from any company mentioned [3] - Seeking Alpha's disclosure notes that past performance does not guarantee future results and that the views may not represent the entire platform [4]

Core Insights - Cap rates are a significant indicator of future returns in REITs, with higher cap rates generally leading to higher forward returns [1] - It is advisable to buy REITs when they are trading at high implied cap rates and avoid purchasing when they are at low implied cap rates [2] - The implied cap rate is calculated as the net operating income (NOI) divided by the price of the property or enterprise value for publicly traded REITs [3] Market Performance - REITs peaked at the end of 2021 with an implied cap rate of about 6%, which is considered low by historical standards [4][5] - The rise in the 10-year Treasury yield from 1% to around 4% has negatively impacted the valuation of REITs, leading to a correction in prices [7][9] - The current median implied cap rate for REITs is 7.7%, indicating a healthy spread over the Treasury yield, with solid underlying real estate fundamentals [10] Sector Analysis - Publicly traded REITs are currently trading below the private value of their underlying real estate, suggesting a potential opportunity for investment [19] - Different property types exhibit varying cap rates, with multifamily, office, retail, industrial, and hotel sectors showing distinct ranges [17] - Industrial and shopping center sectors are highlighted as having high growth potential, while self-storage is noted for being oversupplied and undervalued [21][27] Investment Strategy - The current valuation suggests that public REITs may outperform private real estate investments going forward [20] - The 2nd Market Capital High Yield Portfolio is significantly overweight in industrial and retail sectors while avoiding self-storage [28] - Investors should focus on sectors with favorable combinations of value and growth to maximize returns [28]

Group 1 - Alexander's, Inc. (ALX) has delivered a total return of approximately 19% in 2025, significantly outperforming the Vanguard Real Estate Index Fund ETF, which gained around 3% [1] - The investment strategy includes a focus on REITs, preferred stocks, and high-yield bonds, indicating a long-term fundamental approach to investing [1] Group 2 - The article does not provide any specific investment recommendations or advice regarding the suitability of investments for particular investors [2][3]

Core Viewpoint - Morgan Stanley has made significant adjustments to the ratings of nine popular investment targets in the REITs and real estate services sector for 2026, with seven downgrades and two upgrades, reflecting a more stratified rating distribution as the probability of a soft landing for the U.S. economy increases and the Fed's rate-cutting cycle is expected to continue [1][2]. Group 1: Downgraded Companies - Realty Income (O.US) rating downgraded from "Neutral" to "Underweight" due to its large scale making it difficult to achieve above-average profit growth compared to its net lease REIT peers [3]. - Public Storage (PSA.US) rating downgraded from "Overweight" to "Neutral" as improvements in core growth rates are expected to take longer and not follow a straight line [3]. - Welltower (WELL.US) rating downgraded from "Overweight" to "Neutral" based on a short-term stock price judgment rather than any deterioration in growth prospects [3]. - Regency Centers (REG.US) rating downgraded from "Overweight" to "Neutral," which is also a temporary stock trend judgment, as REG is still considered to have one of the best platforms in the REIT sector with optimistic long-term growth prospects [3]. - Kennedy Wilson (KW.US) rating downgraded from "Neutral" to "Underweight" due to limited upside potential from a pending privatization offer [4]. - UDR (UDR.US) rating downgraded from "Neutral" to "Underweight" [4]. - SmartStop (SMA.US) rating adjusted from "Overweight" to "Neutral" [4]. Group 2: Upgraded Companies - Federal Realty Investment Trust (FRT.US) rating upgraded from "Neutral" to "Overweight" as the company effectively recycles capital from mature assets into higher-quality retail assets, improving growth visibility for 2026 [5]. - Camden Property Trust (CPT.US) rating upgraded from "Underweight" to "Neutral" due to a stronger balance sheet providing greater flexibility for buybacks and development, significantly improving relative risk-reward compared to UDR [5].

Core Viewpoint - Morgan Stanley has made significant rating adjustments for nine popular investment targets in the REITs and real estate services sector, with seven downgrades and two upgrades, reflecting a more stratified rating distribution as the U.S. economy approaches a soft landing and the Federal Reserve's interest rate cut cycle is expected to continue [1][2]. Group 1: Downgraded Companies - Realty Income (O.US) rating downgraded from "Neutral" to "Underweight" due to its large scale making it difficult to achieve above-average profit growth compared to its net lease REIT peers [3]. - Public Storage (PSA.US) rating downgraded from "Overweight" to "Neutral" as expectations for PSA's core growth rate improvement are likely to be prolonged and not linear [3]. - Welltower (WELL.US) rating downgraded from "Overweight" to "Neutral" based on a short-term stock price judgment rather than any deterioration in growth prospects [3]. - Regency Centers (REG.US) rating downgraded from "Overweight" to "Neutral," which is also a temporary stock trend judgment, as REG is still considered to have one of the best platforms in the REIT sector with optimistic long-term growth prospects [3]. - Kennedy Wilson (KW.US) rating downgraded from "Neutral" to "Underweight" due to limited upside potential from a pending privatization offer [4]. - UDR (UDR.US) rating downgraded from "Neutral" to "Underweight" [4]. - SmartStop (SMA.US) rating downgraded from "Overweight" to "Neutral" [4]. Group 2: Upgraded Companies - Federal Realty Investment Trust (FRT.US) rating upgraded from "Neutral" to "Overweight" as the company effectively recycles capital from mature assets into higher-quality retail assets, improving growth visibility for 2026 [5]. - Camden Property Trust (CPT.US) rating upgraded from "Underweight" to "Neutral" due to its stronger balance sheet providing greater flexibility for buybacks and development in 2026, significantly improving relative risk-reward [5].