JD's REIT makes debut in Shanghai

JD Real Estate Investment Trust, the first REIT issued by a privately-owned logistics and warehousing company in China, debuted on the Shanghai Stock Exchange on Wednesday and saw its price surge 11.64 percent on its first trading day.

Total proceeds from this issuance exceeded 1.75 billion yuan ($260 million). 

The underlying assets for the REIT are three logistics parks in Langfang of Hebei province, Wuhan of Hubei province and Chongqing, all which are owned by China's leading e-retailer JD. The total construction area comes to 351,000 square meters, and all three parks are now 100 percent rented out.

Xu Ran, JD's chief financial officer, said the issuance of the REIT will stimulate market confidence in investing in supply chain infrastructure projects. It will also facilitate the digitalization and smart transformation of the logistics and warehousing industry, she said.

JD Property, the infrastructure management subsidiary under JD, is responsible for asset management on the recently released REIT. At present, JD Property has set up a 20-million-sq-m modern warehousing network covering 29 Chinese provinces. It also owns 24 overseas infrastructure projects, a great deal of which are located in Southeast Asia.

REITs provide an alternative way to invest in income-producing real estate. Similar to mutual funds, REITs allow investors to earn dividends from real estate investments in projects like offices, industrial parks or highways without having to buy or manage the projects.

According to the Shanghai Stock Exchange, a total of 16 infrastructure REITs have been trading at the bourse as of Feb 8, with total fundraising coming in at 56 billion yuan. The proceeds from the REITs have also led to new projects whose total investment has approached 300 billion yuan. The existing assets have seen their value extended, boosting investment and better serving the real economy, SSE officials said.

The SSE will explore including more industries and sectors such as new energy and affordable rental housing for REIT issuance this year, exchange officials added.