"Long-term money" to "short-term money" - Behind the acceptance of GF New City Wuyue REIT

Guandian.com In 2026, commercial real estate REITs will enter a period of explosive growth.

Following the end of 2025, when the China Securities Regulatory Commission issued notices encouraging REITs to hold asset portfolios with similar business types, complementary functions, or operational synergies, promoting cross-sector asset integration to enhance scale effects and risk diversification, this year the system work conference once again emphasized the need to “ensure the smooth implementation of commercial real estate REIT pilot projects.”

Riding the policy wave, on March 6, GF New City Wuyue closed-end commercial real estate securities investment fund project status was updated to “Accepted.”

According to the prospectus (draft), the underlying assets of the project are Changzhou Tianning Wuyue Plaza and Nantong Qidong Wuyue Plaza, with a total asset valuation of 2.143 billion yuan. The expected fundraising amount is 1.625 billion yuan, with a forecasted net cash flow distribution rate (annualized) of about 5.5% from October to December 2025, and approximately 5.59% for 2026.

The update on the project status not only marks another step in Sunac Holdings’ layout in the commercial real estate securitization field but also is one of the landmark events for private real estate companies promoting public REITs.

Having “Other Purposes”

As early as three years ago, when the real estate industry was undergoing a deep adjustment, Sunac Holdings had plans to develop REIT projects to activate existing assets and alleviate liquidity and debt pressures.

During the 2023 semi-annual performance briefing, Sunac’s CFO Guan Youdong stated that the company’s consumer infrastructure public REITs were in planning stages and were in close communication with relevant regulatory agencies. At the full-year performance briefing, Chairman and CEO Wang Xiaosong reiterated that the company would actively promote REIT progress.

After nearly two years of preparation, at the end of November 2025, Sunac successfully issued the country’s first consumer-held real estate ABS based on its Shanghai Qingpu Wuyue Plaza, which is also the first such ABS issued by a private A-share listed company, with a scale of 616 million yuan.

The successful landing of this private REIT has strengthened management’s confidence in the securitization of Wuyue Plaza assets. This year, Sunac Holdings has a clearer plan for scaled REIT deployment.

From February 9 to 10, 2026, Sunac Development and Sunac Holdings held a private roadshow in Hong Kong, disclosing their overall REIT plan to domestic and foreign institutions. They clarified that in 2026, they will issue multiple types and levels of REIT products, including public REITs and inter-institutional private REITs, with a total commercial asset valuation to be included in REIT assessments reaching up to 8 billion yuan.

Regarding the use of funds, the proceeds will mainly be used to replace high-cost, short-term debt such as USD bonds and development loans, and to obtain low-cost funds or equity funds with 8-15 year tenors.

This is essentially using the “long-term money” from Wuyue Plaza to replace the “short-term money” from USD bonds, helping the company survive and thrive.

Looking at the company’s financial data, as of the end of Q3 2025, Sunac’s total assets reached 280.673 billion yuan, with total liabilities of 202.072 billion yuan. Although overall financial health remained stable, net cash flow from financing activities was still -3.034 billion yuan, indicating an urgent need to optimize debt structure and reduce financing costs.

At the same time, as of the end of Q3 2025, about 106.5 billion yuan of Sunac’s approximately 121.5 billion yuan in investment properties (mainly Wuyue Plaza) were restricted, with a mortgage ratio of 88%. Among these, 134 Wuyue Plaza commercial complexes were mortgaged, with a financing balance of about 44 billion yuan and a mortgage rate exceeding 40%, limiting liquidity of core assets.

Therefore, under this financial background, deploying commercial REITs has become an inevitable choice for Sunac.

In 2025, Sunac clearly shifted from a “dual-driven” model of “residential + commercial” to “mainly commercial, supplemented by residential.” The full-year plan was to start only 252,700 square meters of new projects and complete 2.6917 million square meters, adopting a “sell-only” inventory reduction model.

At the shareholders’ meeting at the end of May this year, Chairman Wang Xiaosong stated that previously, the company’s focus was on real estate development. In recent years, with market changes, commercial properties have become the company’s core and future foundation, and he plans to dedicate 80% of his time and energy to the commercial sector.

Confidence in REITs Deployment

Whether it is the successful landing of previous private REITs, the smooth acceptance of GF New City Wuyue REITs, or strategic shifts, Sunac’s greatest confidence stems from its vast portfolio of shopping center assets.

As of the end of 2025, Sunac has deployed 207 Wuyue Plazas in 141 cities nationwide, with 178 operating or entrusted management, ranking among the top in the industry.

In comparison, by the end of 2025, Longfor had 102 shopping centers open; China Resources Vientiane Life had 125; and Powerlong Commercial had 97.

Currently, commercial operation has become the main development line for Sunac. From January to December 2025, the company achieved approximately 14.09 billion yuan in total commercial operation revenue, a 10.00% increase from 12.808 billion yuan in the same period last year. In January 2026, total commercial revenue was about 1.201 billion yuan, up 3.36%.

The two flagship projects under Sunac’s REITs plan—Changzhou Tianning Wuyue Plaza and Nantong Qidong Wuyue Plaza—are key assets.

Specifically, Changzhou Tianning Wuyue Plaza is located in the core of Tianning Economic Development Zone, operational since October 2019, with a total construction area of about 173,800 square meters, a leasable commercial area of 69,600 square meters, and a occupancy rate of 97.15% as of September 30, 2025. Its effective rent is 99.38 yuan per square meter per month, with an EBITDA of 52.52 million yuan in the first three quarters of 2025, and an overall valuation of 1.147 billion yuan.

Nantong Qidong Wuyue Plaza is located in the southeastern core development area of Qidong, operational since December 2018, with a total construction area of about 120,300 square meters, a leasable commercial area of 45,100 square meters. As of the same date, its occupancy rate reached 100%, with effective rent of 122.74 yuan per square meter per month, EBITDA of 51.92 million yuan in the first three quarters of 2025, and an overall valuation of 996 million yuan.

Image source: Prospectus, commercial section excerpt

Notably, after the fund’s establishment, about 520 million yuan of external bank loans are planned to be retained for the Tiening project and Qidong project, accounting for 32% of the fund’s net assets.

The prospectus also clearly states that if operating cash inflows fall short of expectations, the actual distributable amount in 2026 could be 16.87% lower than forecasted. Coupled with downward pressure on commercial property rents and occupancy rates, leverage could significantly drag down returns and even affect dividend stability.

However, the entire domestic commercial REITs market remains highly active among investors.

By the end of 2025, there were 79 publicly listed REITs with a total scale exceeding 210 billion yuan, making China the largest in Asia and the second-largest globally.

As of March 9, 2026, among REITs projects under review, 13 infrastructure REITs had been launched, with 2 additional offerings; 14 commercial REITs had been launched, covering shopping centers, office buildings, hotels, outlet malls, and mixed-use complexes.

Disclaimer: The content and data in this article are compiled by Guandian based on publicly available information and do not constitute investment advice. Please verify before use.