Yuexiu Real Estate Investment Trust Traversing the Cycle

Author | Huang Yu

Editor | Wang Xiaojun

On August 14, Yuexiu Real Estate Investment Trust (referred to as "Yuexiu REIT", 00405.HK) released its mid-year results for 2025. The announcement showed that its total revenue for the first half of the year was approximately 966 million yuan, a year-on-year decrease of 6.6%; the net property income was approximately 679 million yuan, a year-on-year decrease of 8.6%.

Against this backdrop, the total mid-term distribution of Yuexiu REIT was approximately 170 million yuan, with a distribution of about 0.0333 yuan per fund unit. Based on the closing price of the fund unit at HKD 0.87 on June 30, the distribution yield per fund unit for Yuexiu REIT was approximately 4.21%, with an annualized distribution yield of 8.42%.

In the current complex and changing market environment, Yuexiu REIT still demonstrates strong risk resistance capabilities.

The management of Yuexiu REIT pointed out that to effectively respond to adverse industry factors, the manager strategically seized market share, strengthened risk control through proactive lease renewals, invested in capital renovations to enhance product competitiveness, and implemented comprehensive measures to stabilize the operational fundamentals, which better supported the fund's mid-term operating income.

Since acquiring Guangzhou Yuexiu Financial Tower and Hong Kong Yuexiu Tower in 2021 and 2022 respectively, the property portfolio under Yuexiu REIT has increased to 10 properties, covering core locations in Guangzhou, Shanghai, Wuhan, Hangzhou, and Hong Kong. As of the end of June 2025, the total property ownership area of Yuexiu REIT was approximately 1.184 million square meters, with a total property valuation of approximately 41.889 billion yuan.

From the perspective of different business types, the office sector remains the cornerstone of Yuexiu REIT, contributing revenue of 532 million yuan in the first half of this year, accounting for as much as 55%; in other sectors, hotel apartments are the second largest support pillar for Yuexiu REIT, with revenue of approximately 250 million yuan in the first half of this year, accounting for 26%; wholesale markets contributed 11.32% of revenue, while retail markets accounted for 7.74%.

In terms of specific projects, the Guojin Center located in Guangzhou is the main source of income for Yuexiu REIT, accounting for 50.3% of total revenue, while Baima Tower accounts for approximately 11.3% of total operating income; Wealth Plaza accounts for 3.2%; Chengjian Tower accounts for 3.2%; Victoria Plaza accounts for 3.3%; Shanghai Yuexiu Tower accounts for 4.9%; Wuhan properties account for 4.8%; Hangzhou Weiduli accounts for 1.7%; Yuexiu Financial Tower accounts for 17.1%; and the 17th and 23rd floors of Hong Kong Yuexiu Tower account for 0.2%.

To maximize the utilization of existing resources, Yuexiu REIT focused in the first half of this year on its continuously strengthened "four-dimensional capabilities" — product capability, leasing capability, operational capability, and service capability, actively capturing development opportunities across various sectors, optimizing the leasing mechanism, accelerating product upgrades and iterations, and actively creating new performance growth points.

It is reported that Yuexiu REIT has also established a special team, based on the principle of "one project, one strategy, one special team," prioritizing the stabilization of rental rates, expanding leasing channels, launching products such as furnished units and small to medium-sized units that meet demand, while introducing and retaining quality tenants to optimize the tenant structure Against this backdrop, as of the end of the first half of this year, the overall occupancy rate of properties under the Yuexiu Real Estate Investment Trust was approximately 82.2%, with an overall rental price of RMB 187.5 per square meter per month (excluding serviced apartments), maintaining stable overall operations.

In terms of financing, benefiting from the declining interest rate environment, the financing cost of the Yuexiu Real Estate Investment Trust has further decreased, with a financing cost of RMB 403 million in the first half of the year, a year-on-year decrease of 13.5%, saving RMB 63 million compared to the same period last year, and the average financing cost has dropped to a near three-year low.

At the same time, the average interest payment rate of the Yuexiu Real Estate Investment Trust in the first half of the year was 3.92%, a year-on-year decrease of 64 basis points; foreign exchange exposure management was appropriate, reducing by 31 percentage points compared to the same period last year to 28%.

It is worth mentioning that since 2023, the manager of the Yuexiu Real Estate Investment Trust has actively managed and optimized the financial structure, with the proportion of RMB financing further increasing to 72%, up 31 percentage points from the same period last year and up 12 percentage points from the end of last year.

In addition, the Yuexiu Real Estate Investment Trust made significant breakthroughs at the China Interbank Market Dealers Association, successfully issuing RMB 600 million three-year Panda bonds in July this year, with a coupon rate as low as 2.70%. This is also the world's first listed REITs Panda bond issuance.

Financial management capability is the core pillar of a company's stable development. In a complex and changing interest rate environment, the Yuexiu Real Estate Investment Trust fully leverages its financial "flexibility" advantage, effectively optimizing its capital structure and significantly reducing financing costs, providing solid financial support for the fund's stable operation and sustainable development.

As the world's first Hong Kong-listed real estate investment trust investing in properties in mainland China, the Yuexiu Real Estate Investment Trust is about to celebrate its 20th anniversary of listing.

Looking ahead to the second half of 2025, the Yuexiu Real Estate Investment Trust stated that it will maintain a cautiously optimistic attitude, adhering to the principle of "responding to changes with changes and implementing precise policies," continuing to strengthen its development foundation while steadily enhancing asset value, and responding to external uncertainties with the certainty of high-quality development