SHANGHAI, 14 October, 2022: DNE Group, a leading new economy infrastructure investor, developer, and operator in China, in partnership with Guotai Junan Securities, listed its DNE New Economy C-REIT (“DNE REIT”) on the Shanghai Stock Exchange(SSE). This landmark debut brings to the market one of China’s first industrial workshop REITs (list code: 508088).
Representatives from the Shanghai Stock Exchange, Guotai Junan, the REIT’s underwriter and manager, as well as cornerstone investors attended Friday’s listing event. The gong-striking occasion also brought together government officials from Shanghai and Jiangsu, where DNE REIT’s constituent industrial workshops are located. Mr. Sun Dongping, Chairman and Chief Executive Officer of DNE Group, and other guests hit the iconic gong on the SSE trading floor to mark the start of trading. Ms. Wang Yingpei, co-founder of DNE Capital, exchanged souvenirs with the stock exchange’s executives.
Hailed as a landmark step in China’s financial reforms, the launch of the nation’s first batch of standard industrial estate REITs, a very short list that included the DNE REIT, was given the green light by the China Securities Regulatory Commission in September.
The share issuance of DNE REIT received strong feedback from investors. The retail tranche was 101 times oversubscribed while the institutional tranche was oversubscribed by 296 times, bringing the total fund raised to RMB 1.5175 billion.
DNE Group Chairman and CEO Sun said: “The successful listing of our new economy REITs, one of the first industrial workshop REITs in China, is a testament to our experience and expertise in investing and operating industrial infrastructure and assets.
“The listing will inject more liquidity into our assets to build, operate, and optimize industrial parks that form our portfolio. Our business can better align with and enhance the economic and regional integration of the Yangtze River Delta, where industrial clusters and supply chains consolidate as national policies and businesses funnel resources and concentrate efforts. ”
“Industrial infrastructure, like industrial estates and parks, is a major engine driving China’s internal circulation. National policies rolled out to deepen investment and financing reforms as well as Yangtze River Delta integration call for more infrastructure REITs. The listing of our REIT comes at an opportune time and we are now in the vanguard of this trend.”
In May 2022, the Chinese State Council underscored the role of REITs in unlocking value for stock assets and broadening investment channels.
DNE REIT’s four underlying assets are strategically located in Shanghai, Suzhou, Wuxi, and Changzhou, which are core industrial hubs in the Yangtze River Delta. With the REIT’s listing, investors can now tap into the opportunities arising from the region’s sound industrial environment and supply chains. Industrial infrastructure REITs are new avenues of growth for asset activation to enhance the management of industrial parks and foster the region’s industrial upgrade and economic development.
DNE REIT’s four underlying assets boast outstanding long-term growth prospects, with an aggregate weighted average lease expiring in 6.47-7.37 years and an annualized rental growth of 3-5%. Despite the impact from Covid-19 earlier this year, leasing performance remains resilient with no early surrender of tenancies at the REIT’s four industrial parks. Furthermore, the four parks are closely knit along the region’s value and supply chains, thanks to the Yangtze River Delta’s sound industrial environment and regional integration. REITs underpinned by quality assets and concrete performance will hold increasing appeal for China’s industrial investors, insurers, and other institutional investors.
Zhang Zheng, deputy dean of Peking University’s Guanghua School of Management, said:
“DNE REIT’s underlying assets are industrial estates and facilities geared toward the ‘new economy’ such as advanced, smart manufacturing. Tenants moving into DNE’s estates are normally heavily invested in manufacturing equipment so there is distinctive ‘stickiness’—meaning long leases. In addition, they rely on the warehousing, logistics, and supply chain services offered by DNE’s estates, parks, and clusters. All these make for a stable tenant base and a base for stable rental growth.”
About DNE REIT’s underlying assets
The REIT’s underlying assets are four industrial parks scattered across Shanghai’s Jinshan district as well as the high-tech development zones in three cities – Suzhou, Wuxi, and Changzhou – in Jiangsu province. These parks, up and running since 2019, are constantly fully let, with a total of 45 manufacturing tenants from the leading edges of China’s new economy like IT, high-tech materials, precision machinery, EV, and bio and pharmaceutical sectors. DNE’s client base also includes some Fortune Global 500 firms, like auto parts supplier Magna and SK Group’s semiconductor production arm.
About DNE Group
DNE Group is a leading new economy infrastructure investor, developer, and operator in China with over $15 billion in AUM and GFA of over 12 million square meters across multiple verticals, including logistics and cold chains, life sciences, modern manufacturing parks, urban redevelopment, and data centers. DNE also runs DNE Capital, a private equity investment platform focusing on new economy industry investment.
DNE provides a full range of integrated infrastructure solutions to new economy clients, meeting their needs in R&D, manufacturing, warehousing, and corporate headquarters. With a seasoned management team, DNE provides comprehensive capabilities spanning from acquisition, development, and construction to asset and fund management. DNE aspires to deliver sustainable long-term value to its new economy clients, capital partners, and stakeholders.