China and Hong Kong Property: The first China REITs issued by HK developers

New World Development (NWD) filed an offering circular for its China REITs on Shanghai Stock Exchange on Sept 19 2026. This is the first HK developer issuing a public China REITs, echoing the recent relaxation in China REITs regulation. As per our conversation with NWD, certain parts of the net proceeds are expected to be transferred to offshore as per mainland's regulation, which should be appealing to HK developers in our view. This would be a positive read-across to HK Land (clear capital recycling target) and Swire Properties (track record of capital recycling), Hang Lung and Kerry Properties with close to 300bp dividend yield differential between the listed stocks vs China REITs dividend yield. Recent relaxation of China REITs and rising US Treasury yield (over 5%) makes China REITs more appealing to HK developers in terms of capital recycling for its mainland assets. We estimate China REITs' required dividend distribution yield is 4.5% for malls and 5.0% for offices, with over 20