China Overseas Plans Shenzhen REIT Spin-Off

China Overseas Land & Investment (00688) fell 2.2% to HK$12.63 as the company proposed spinning off and separately listing a publicly offered commercial real estate investment trust on the Shenzhen Stock Exchange, according to ETNet. The fund is expected to raise a total of RMB 1.534 billion, and China Overseas plans to subscribe for 20% of the fund units. The underlying asset is the Foshan Qian Deng Lake Huanyu City shopping mall project in Nanhai District, Foshan, Guangdong. After the spin-off, the REIT will no longer be a subsidiary of China Overseas and will not be consolidated into the group’s financial statements. China Overseas said the REIT would provide another form of equity financing, reduce reliance on traditional debt funding, help activate commercial property assets, and avoid the adverse effects of long payback periods and low asset turnover in commercial property investment.