In the ever-evolving landscape of investment opportunities, China's public Real Estate Investment Trusts (REITs) are rapidly gaining traction and breaking records, illustrating a robust appetite among investorsThe remarkable recent achievements in this sector not only highlight the growing enthusiasm for this investment model but also underscore its emerging significance in the Chinese financial market.

On February 12, the announcement from Huatai-PB's Jiuzhoutong Pharmaceutical REIT sent ripples through the investment communityThis particular REIT boasted an astonishing subscription multiple of 1,192 times among public investors, shattering the previous record held by Guotai Junan's Jinan Energy Heating REIT, which had reached 813.44 timesSuch statistics provide a glimpse into the fervor surrounding public REITs in China and the high demand for investment opportunities within this space.

The success of public REITs is not only confined to the initial offering stages but extends into the secondary market, displaying remarkable growthAccording to Wind data, as of February 12, the CSI REITs Total Return Index surged by 8.86% since the beginning of the year, with several REITs achieving annual gains exceeding 20%. These figures illustrate a strong performance that further bolsters investor confidence.

The public REIT market's boom can largely be attributed to its limited availability and the potential for lucrative returnsIndustry analysts predict that the attractiveness of these investments may face pressures as more public REITs enter the market, which could lead to a normalization of subscription multiplesHowever, in the short term, strategies aimed at securing newly launched REITs remain highly favorable, influenced significantly by market trends and supportive policies.

The Huatai-PB Jiuzhoutong Pharmaceutical REIT, specifically, represents a significant milestone in China's financial landscape as it marks the country's first public REIT dedicated to pharmaceutical warehousing and logistics

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The project's sponsor, Jiuzhoutong Group, stands as the largest private pharmaceutical distribution enterprise in the nation, boasting a vast logistical framework that covers over 96% of the country.

This background gives insight into why there was such high interest from institutional investors during the strategic allocation phaseMajor stakeholders included notable insurance firms like Pacific Insurance, and reputable brokerages such as Dongfang Securities and Galaxy Securities, indicating that confidence in this REIT’s underlying assets was widespread.

When questioned about the selection of Jiuzhoutong's Dongxihu Modern Pharmaceutical Warehousing and Logistics Center as the underlying asset, the fund manager Li Xinning provided several compelling reasonsShe articulated that the pharmaceutical logistics sector is on a promising trajectory, given the country's aging population and increasing demand for medical productsAs these dynamics continue to evolve, they are likely to favor leading enterprises in the sectorFurthermore, significant barriers to entry, including stringent regulatory requirements imposed by health authorities, make it challenging for new competitors to enter the marketThis competitive landscape positions Jiuzhoutong as a formidable entity with a well-established clientele.

Li also highlighted the substantial financial commitment required for modern pharmaceutical logistical centers, which serves as a deterrent for new entrants, thereby consolidating Jiuzhoutong's market position. "We made a selective choice from Jiuzhoutong's rich asset pool, aiming for quality, and ultimately chose the Dongxihu facility, which has been recognized as one of the top ten intelligent warehousing and logistics demonstration bases in the country,” she explained.

Beyond initial offerings, public REITs have shown robust traction in the secondary market as well, reflecting a healthy sentiment among investorsFor instance, by February 12, the CSRC data indicated that many public REIT products have significantly outperformed, with some, such as the China Merchants Industrial REIT and Huaxia Hefei High-tech REIT, recording gains of over 15% year-to-date.

This market activity signals a potential recovery from the adjustments experienced in previous years, indicating that investors are increasingly recognizing the value of public REITs, particularly as core asset operations stabilize

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