Capitaland Commercial C Reit Opens 196 Higher Shanghai Stock Exchange

CapitaLand Commercial C-REIT (CLCR), the eighth listed fund under CapitaLand Investment (CLI), made a strong debut on the Shanghai Stock Exchange (SSE) on Sept 29, with a 19.6% increase from its initial public offering (IPO) price to RMB6.84. The fund raised RMB2.29 billion ($409 million) through the issuance of 400 million IPO units at RMB5.718 per unit, which exceeded the initial estimate by 7%.

Based on the IPO price, CLCR is expected to provide a distribution yield of 4.40% for FY2025 ending Dec 31 and 4.53% for FY2026.

As China’s first international-sponsored retail C-REIT, CLCR attracted strong interest from both offline institutional and retail investors. The offline institutional tranche was oversubscribed 253 times, setting a new record for retail C-REITs in China. The public tranche was also highly subscribed, closing ahead of schedule and being 535.2 times oversubscribed.

Speaking at CLCR’s listing ceremony in Mandarin, CLI China CEO Puah Tze Shyang said that the oversubscription “underscores the market’s dual recognition of CLI’s asset management capabilities and the resilience of China’s consumer market”. Puah also emphasized the need to earn respect rather than simply expecting it, stating that CLI remains committed to proving their expertise.

In China, institutional investors who participate in the bookbuilding exercise are referred to as offline institutional investors, while those who subscribe through the public tranche are known as online institutional investors.

According to CLI, the majority of the IPO units were allocated to insurance companies, securities firms, and “strategic capital investors”. Representatives from DBS and HSBC attended the listing ceremony on Sept 29.

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In a statement released on Sept 12, CLI announced that cornerstone investors accounted for 40.11% of the IPO units. In the bookbuilding tranche, offline institutional investors were allocated 27.92% of the units, while online institutional investors subscribed for the remaining 11.97%.

Only Chinese investors are permitted to invest in CLCR. CapitaLand China Trust (CLCT) is a multi-asset class vehicle that targets global investors, while CLCR exclusively invests in retail assets in mainland China, catering to 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.

In an interview with the media, Puah stated that by combining CLCR and CLCT, it becomes apparent that CLCT is a “REIT-of-REITs”. He clarified that while CLCT serves foreign investors seeking exposure to China through its stake in CLCR, it also serves a domestic base of institutional and retail investors. He also noted that this allows them to take on more risk while diversifying their investment portfolio.

Regarding the IPO portfolio, CLI and CLD have divested CapitaMall SKY+ in Guangzhou, while CLCT is divesting CapitaMall Yuhuating in Changsha to seed CLCR’s portfolio. The divestment is expected to be completed by the end of October.

CapitaMall SKY+ is situated in Guangzhou’s Baiyun Central Business District and has a direct connection to Baiyun Park subway station. CapitaMall Yuhuating is a community mall in Changsha’s Yuhua District and is accessible via two adjacent subway stations on two lines and a future subway station on a third line.

Together, the two malls have a combined value of approximately RMB2.6 billion. They have a total gross floor area of 168,405 sqm and an overall committed occupancy rate of 96%.

CLI will continue to operate CapitaMall SKY+ and CapitaMall Yuhuating as the sponsor and asset manager of CLCR. Additionally, CLI will support the growth of CLCR and CLCT by offering a “quality pipeline of potential assets”. In China, CLI manages 43 retail properties across 18 cities, with total assets under management of approximately $18 billion.

The China Securities Regulatory Commission and National Development and Reform Commission have progressively launched C-REITs across different sub-sectors since June 2021. With the listing of CLCR, there are now 75 C-REITs across various asset classes, including rental housing and logistics. As of Sept 19, prior to CLCR’s debut, the 74 C-REITs had a total market capitalization of RMB221 billion.

Retail C-REITs were launched in March 2024 under the broader “consumer infrastructure” or “consumption” labels. Since then, 10 retail C-REITs have listed, but only with one retail asset each, in line with Chinese regulations. Harvest Wumart Consumer REIT, which listed on the SSE in March 2024, was among the first retail C-REITs to list, with an underlying supermarket asset located in Beijing’s central urban area.

CLCR is the first retail C-REIT to list with two assets in its IPO portfolio. Puah believes this will allow CLCR to demonstrate the importance of scale and diversity. He also noted that the listing “will send a message to regulators”, but that they are still bound by national rules.

Moreover, Puah stated that “The market appreciates us as well because we clearly have a pipeline. If I’m a C-REIT investor, I would definitely look towards someone – an achiever – who is able to add scale and diversity because that really protects the performance of the C-REIT.”

Beyond CLCR, Puah stated that CLI is “very open” to working on a ninth listed fund; however, their primary focus is on ensuring that CLCR trades well. He also expressed interest in expanding their funds under management through the acquisition of new assets, noting that they are always monitoring market conditions.

Additionally, 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 in collaboration with a major domestic insurance company, 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.

According to a statement released on Sept 29, CLI states that the China Business Park RMB Fund IV closed with an equity commitment of RMB529 million from the Master Fund. As part of CLI’s capital recycling strategy, they have divested a business park into this sub-fund.

CLI also plans to launch a second sub-fund, which focuses on retail assets in 4Q2025, with a target equity commitment of RMB900 million. Puah also stated that CLI has a pipeline of retail assets, logistics parks, and rental housing across Tier 1 and top Tier 2 cities that could provide growth opportunities for this platform.

In prepared remarks, Puah stated that “The listing of CLCR and the continued growth of our RMB Master Fund demonstrates strong momentum in our capital recycling journey and pivot to asset-light business model”. He also noted that the listing of CLCR and their RMB funds supports their domestic-for-domestic fund strategy. This enables them to tap into China’s “substantial capital market” to grow their funds under management and recurring fee income.