Market Trends - For-sale housing market problems are starting to affect the rental business [1]

Core Points - McGrath RentCorp announced a quarterly cash dividend of $0.485 per common share for the quarter ended September 30, 2025 [1] - The dividend will be payable on October 31, 2025, to shareholders of record on October 17, 2025 [1] - The year 2025 marks the 34th consecutive year that McGrath RentCorp has raised its dividend [1]

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Core Insights - The average rent in 50 cities in China has decreased by 3.25% in 2024, with a notable decline since August of the previous year [3] - The current average rent is 35.2 yuan per square meter per month, with a month-on-month decrease of 0.32% and a year-on-year decrease of 3.4% [3] - Only two cities, Jiaxing and Shijiazhuang, have seen slight increases in rent, while the other 48 cities are experiencing declines [3] Factors Influencing Rent Decline - Economic slowdown leading to increased employment pressure on young people, resulting in reduced demand for rental properties [3] - The rise of remote work has caused many individuals to relocate to suburban or lower-tier cities, diverting demand from core urban areas [3] - Increased supply in the rental market due to government initiatives promoting affordable rental housing and a sluggish second-hand housing market [3] Implications for Investors - Short-term pressure on rental-related assets, particularly for long-term rental apartment companies, which may face profit margin compression due to falling rents [3] - Real estate agencies and rental platforms may also experience negative impacts on their performance [3] - However, the decline in rents could indicate a correction in the rental market, potentially stimulating consumer spending as young people have more disposable income [3] Investment Recommendations - Focus on high-quality rental assets in core locations, as these properties tend to be more resilient despite overall rent declines [4] - Consider investing in policy-supported rental sectors, such as REITs for affordable rental housing, which offer stability albeit lower returns [4] - Caution is advised during the current adjustment period of the rental market, with a recommendation to avoid assets with unreasonable rental yields [4] Economic Context - The decline in rents signals a shift in the economic structure from rapid growth to high-quality development [5] - Investors are encouraged to remain calm and analyze the market carefully, looking for long-term opportunities in resilient rental assets [5]