On December 27, under the guidance of China Securities Regulatory Commission (CSRC), Shanghai Stock Exchange (SSE) issued the Guidelines of Shanghai Stock Exchange for the Application of Rules for the Publicly Offered Infrastructure Real Estate Investment Trusts (REITs) No. 1 - Key Points of Review (for Trial Implementation) (2024 Revision) (hereinafter referred to as the "Guidelines"). The Guidelines is a timely summary and refinement of the REITs review practices in the infrastructure sector. It aims to further improve the REIT rule system, enhance the standardization, effectiveness, and relevance of REIT review and information disclosure, urge market participants to fulfill their responsibilities, effectively protect investors' legitimate rights and interests, and promote the regular issuance and high-quality development of the REIT market.
Reorganize the content to enhance its logic and readability. In addition to the basic requirement of refining the REIT review and information disclosure, the Guidelines also adjusted the content to enhance the logical coherence between chapters and improve its readability. To facilitate access and use by market participants, the document is divided into a main section and an attachment. The main section contains six chapters which detail the general provisions regarding underlying assets. The attachment takes into full consideration the characteristics of mature asset types, setting targeted review and information disclosure requirements for industrial parks, toll roads, rental housing, and warehousing logistics, as well as consumption infrastructure projects.
Strengthen requirements for key matters to hold market participants to their principal responsibilities. The Guidelines standardizes core matters of widespread market concern regarding REIT review and information disclosure, asset evaluation, and operational management. It urges market participants to fulfill their responsibilities for effective review and information disclosure. The document further clarifies the entry requirements for business participants and underlying assets, as well as the disclosure requirements for project operations and financial conditions. It guides evaluation agencies to determine assessment results prudently, taking into account the market environment and the characteristics of underlying assets, thereby effectively enhancing evaluation quality. The document also compels managers to conduct independent reviews of evaluation parameters and methodology. Additionally, it outlines a layered decision-making mechanism, incentive and constraint arrangements, and emergency response requirements for REITs, which guide funds in achieving incentive and constraint objectives by setting reasonable operational management fees, performance supervision and other arrangements, and effectively balancing value creation and the protection of investors' legal rights and interests.
Ensure disclosure tailored to the characteristics of major asset classes. The Guidelines fully considers the characteristics of different asset types, clarifying the differentiated requirements for each major asset class to ensure tailored review and information disclosure. For industrial parks and warehousing logistics projects, the document further specifies the disclosure requirements regarding compliance, operational and financial conditions, and operational management. For toll road projects, it further clarifies the disclosure requirements for key operational and revenue indicators related to vehicle traffic volume, tolls, and others. For rental housing projects, it adds review and information disclosure requirements for market-based rental housing projects, as well as rental housing projects specifically designed to provide supporting services for enterprises located in industrial parks. For consumption infrastructure projects, it further articulates the disclosure requirements regarding income situations, lessee conditions, lease types, and lease payment situations.
Under the coordination and guidance of the CSRC, the regular REIT issuance is picking up in pace and quality. Since the beginning of this year, the number of listed products in the SSE's REIT market has reached 17. As of now, there are a total of 37 listed REIT products on the SSE, raising approximately 112.1 billion yuan. Their underlying assets represent a variety of toll roads, industrial parks, warehousing logistics, indemnificatory housing rental, consumption infrastructure, and new energy. Next, the SSE will follow the decisions of the CSRC to strike a balance between compliance and development, continue to improve REIT rules for a better market ecosystem, and facilitate the high-quality development of the REIT market, thereby better serving the national strategies and the overall economic and social development.
