China's first REITs snapped up by retail investors

SHANGHAI, May 31 (Reuters) - China’s first batch of real estate investment trusts (REITs) were snapped up by retail investors on their first day of sales on Monday, according to fund managers and state media.

The retail tranches of the nine REITs, worth about 2 billion yuan ($314.05 million), attracted over 30 billion yuan of retail subscriptions, or over 10 times the amount available, official Securities Times reported. Meanwhile, fund managers have suspended taking new subscriptions.

China is kicking off its long-awaited public REITs market, as Beijing seeks to channel private money into infrastructure projects to ease debt burdens on local governments. Initially, eligible underlying assets don’t include commercial properties such as shopping malls or offices.

The nine REITs seek to raise an estimated 30 billion yuan, and will invest in projects such as warehouses, highways, industrial park and sewage plants. Only a small fraction is reserved for retail investors, with the remainder being sold to institutions.

“Innovative products always draw enthusiasm from Chinese investors,” said Li Huiyong, vice general manager of Hwabao WP Fund Management Co.

“In addition, investors are betting China’s first REITs will be more likely to see premiums to their net assets, rather than discounts, when they start trading.”

REITs trade like stocks on stock exchanges, but promise investors stable incomes from their underlying assets in much the same way as bonds do.

Of China’s first nine REITs, five will be traded in Shanghai and four in Shenzhen. Their managers include AVIC Fund Management Co, Bosera Asset Management Co and Fullgoal Fund Management Co. ($1 = 6.3684 Chinese yuan renminbi) (Reporting by Samuel Shen and Andrew Galbraith; Editing by William Maclean)