Capitaland Commercial C Reit Opens 196 Higher Shanghai Stock Exchange
CapitaLand Commercial C-REIT (CLCR), the eighth listed fund of CapitaLand Investment (CLI), made an impressive debut on the Shanghai Stock Exchange (SSE) on September 29, opening 19.6% above its initial public offering (IPO) price at RMB6.84. With an IPO price of RMB5.718 per unit, CLCR successfully raised RMB2.29 billion ($409 million) by issuing 400 million units, surpassing the initial estimate of RMB2.14 billion by 7%. According to the IPO price, CLCR is expected to have a distribution yield of 4.40% for the fiscal year 2025, ending December 31, and 4.53% for the fiscal year 2026.
Notably, CLCR is China’s first international-sponsored retail C-REIT. Earlier this month, the offline institutional tranche was oversubscribed 253 times, setting a new record among retail C-REITs in China. The IPO also saw strong retail interest, with the public tranche closing ahead of schedule and being 535.2 times subscribed.
Speaking at CLCR’s listing ceremony on September 29 in Mandarin, CEO of CLI China, Puah Tze Shyang, said that the oversubscription “demonstrates the market’s dual recognition of CLI’s asset management capabilities and the resilience of China’s consumer market.” He added, “Although we have over 20 years of REIT management expertise, we believe that respect is earned, not given. We remain committed to earning our stripes.”
In China, institutional investors participating in the bookbuilding exercise are referred to as offline institutional investors, while those subscribing through the public tranche are known as online institutional investors. According to CLI, insurance companies, securities firms, and “strategic capital investors” received the majority of the IPO units. Representatives from DBS and HSBC attended the listing ceremony.
As per CLI’s announcement on September 12, cornerstone investors took up 40.11% of the units, offline institutional investors were allotted 27.92% in the bookbuilding tranche, and online institutional investors subscribed for the remaining 11.97%. Only Chinese investors can invest in CLCR. In contrast, CapitaLand China Trust (CLCT) is a diversified multi-asset class vehicle targeting global investors. Its investment mandate spans retail, office, and industrial assets across Greater China. CLCR invests exclusively in retail assets in mainland China, targeting domestic investors.
CLI, CLCT, and CapitaLand Development (CLD) collectively hold a 20% interest in the IPO units. In particular, CLCT subscribed for a 5% strategic stake in CLCR at the IPO price of RMB5.718 per unit.
“When you combine CLCR and CLCT, what is interesting is that [CLCT] is a REIT-of-REITs,” says Puah to Singaporean media. “We serve foreign investors wanting China exposure through its stake in CLCR, it serves a purely domestic, institutional and retail clientele, but when you switch over, we also have insurance capital that feels a bit like a CLCT because it’s diversified. However, it will allow us to take on a little bit more risk.” He adds, “That’s the beauty of the domestic-for-domestic strategy that we have. We have different platforms, and we are then able to serve a wider or more diversified capital pool.”
About the IPO portfolio
To seed CLCR’s IPO portfolio, CLI and CLD have divested CapitaMall SKY+ in Guangzhou, while CLCT is divesting CapitaMall Yuhuating in Changsha into CLCR. The divestment is expected to be legally complete by the end of October. CapitaMall SKY+ is located in Guangzhou’s Baiyun Central Business District and directly connected to Baiyun Park subway station. In contrast, CapitaMall Yuhuating is a community mall situated in Changsha’s Yuhua District, accessible via two adjacent subway stations on two lines, as well as a future subway station on a third line.
Both malls combined have a value of approximately RMB2.6 billion, with a total gross floor area (GFA) of 168,405 sqm and a committed occupancy rate of 96%. CLI will continue to operate CapitaMall SKY+ and CapitaMall Yuhuating as the sponsor and asset manager of CLCR. Furthermore, CLI says it will support the growth of CLCR and CLCT through its ability to offer a “quality pipeline of potential assets.” In China, CLI manages 43 operational retail properties across 18 cities with a total of $18 billion in retail assets under management.
Retail C-REITs
Since June 2021, the China Securities Regulatory Commission and the National Development and Reform Commission have progressively launched C-REITs across different sub-sectors. With the listing of CLCR, there are now 75 C-REITs across various asset classes, including rental housing and logistics. As of September 19, before CLCR’s debut, the 74 C-REITs had a total market capitalization of approximately RMB221 billion.
Retail C-REITs were launched under the broader “consumer infrastructure” or “consumption” labels in March 2024. Since then, ten retail C-REITs have listed, but only with one retail asset each, in line with Chinese regulations. Among them is Harvest Wumart Consumer REIT, which listed on the SSE in March 2024 with an underlying supermarket asset located in the central urban area of Beijing.
Similar to its peers, CLCR faces a one-year moratorium from its listing date, which blocks new acquisitions. Speaking to the media, Puah says regulators could halve this period. He says, “For now, we are just waiting [to see] whether we can start to inject more stabilised, quality assets after six months, rather than a year.”
Retail C-REITs that have been on the market for a year and a half are now preparing to grow their portfolios. Puah says that China Resources Mall REIT’s sponsor, which listed on the Shenzhen Stock Exchange in March 2024, has already identified and announced their next injection of assets.
CLCR is the first retail C-REIT to list with two assets in its IPO portfolio. Puah believes that this concession will allow CLCR to demonstrate how scale and diversity are important. “We bring forward this message to the regulator, but we are still bound by national rules.” He adds, “The market appreciates us as well, because we clearly have a pipeline. From a C-REIT investor’s perspective, I would definitely look towards a sponsor who can add scale and diversity because it protects the performance of the C-REIT.”
Beyond CLCR, Puah says that CLI is “very open” to working on a ninth listed fund. He adds, however, that the “first order of business” is to ensure that CLCR trades well. He says, “We are always looking out for how the market changes and evolves. We are in the business of managing the largest REIT franchise in Asia Pacific. So, if there’s an opportunity to add to [CLI’s] REITs, we will do it.”
Sub-fund closes
In addition to the listing of CLCR, CLI has closed the first sub-fund, China Business Park RMB Fund IV, under its inaugural onshore master fund in China – the CLI RMB Master Fund. Established in May with a major domestic insurance company as a co-investor, the Master Fund has RMB5 billion in total equity commitments and invests in a series of sub-funds that acquire income-producing assets with long-term growth potential.
CLI announced on September 29 that China Business Park RMB Fund IV closed with an equity commitment of RMB529 million from the Master Fund. As part of its capital recycling strategy, CLI divested a business park into this sub-fund.
CLI plans to launch a second sub-fund focusing on retail assets in the fourth quarter of 2025, with a target equity commitment of RMB900 million. “CLI has a pipeline of retail assets, logistics parks, and rental housing across Tier 1 and top Tier 2 cities that could potentially provide growth opportunities for this platform,” the company said in its announcement.
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In prepared remarks, Puah said, “The listing of CLCR and the continued growth of our RMB Master Fund demonstrate strong momentum in our capital recycling journey and pivot to asset-light business model. The listing of CLCR and our RMB funds also support our domestic-for-domestic fund strategy to tap into China’s substantial capital market to grow our funds under management and recurring fee income.”