China Securities Co., Ltd.: Marginal improvement in pro-cyclical sectors. Publicly-offered REITs overall performance exceeds expectations.

China Securities Co., Ltd. released a research report stating that 77 REITs disclosed their Q4 2025 earnings, with marginal improvement in pro-cyclical sectors and growth in counter-cyclical sectors. 42 new REITs achieved Q4 performance exceeding expectations, with the average attainment rate of the three major indicators (revenue, EBITDA, and distributable amount) being 103.7%, 92.4%, and 104.1% respectively. Overall, existing REITs showed marginal improvement in performance, with average year-on-year changes in the three major indicators being 5.2%, 6.2%, and 17.2%. Primary market pricing is becoming more rational, shifting from "general selection" to "selective selection" in new listings and allocation strategies. Policy dividends are being concentrated, and a positive outlook is held for the performance of the REITs market in the first half of 2026, with a recommendation to focus on the three main themes of "counter-cyclical", "highly prosperous", and "strong expansion fundraising". Key points from China Securities Co., Ltd.: Overview New REITs in Q4 performed better than expected, with marginal improvement in existing projects. By the end of 2025, a total of 78 REITs were listed, of which 77 disclosed their Q4 2025 earnings. (1) Marginal improvement in pro-cyclical sectors: operating margins stabilizing in industrial parks, structural recovery in warehousing and logistics; (2) Growth in counter-cyclical sectors: rental increases in consumer REITs, rental increases in policy-supported rental housing. 42 new REITs achieved Q4 performance exceeding expectations, with the average attainment rate of the three major indicators (revenue, EBITDA, and distributable amount) being 103.7%, 92.4%, and 104.1% respectively. Overall, existing REITs showed marginal improvement in performance, with average year-on-year changes in the three major indicators being 5.2%, 6.2%, and 17.2%. Sectors The consumer and policy-supported rental housing sectors performed well, with significant fluctuations in the municipal environmental protection sector due to seasonal factors, underperformance in the transportation infrastructure sector, and mixed performance in the energy, industrial park, and warehousing and logistics sectors. (1) Industrial parks: continued pressure year-on-year, rental rates improving month-on-month, overall industry supply-demand pressure still exists, factory REITs outperforming R&D office REITs in terms of quantity and price performance, showing customer stickiness and performance resilience; (2) Warehousing and logistics: marginal improvement in quantity, prices continue to explore bottom, stability in full and related lease agreements; (3) Policy-supported rental housing: high rental rates with narrow fluctuations, policy-supported rental housing rents stabilizing and rising; (4) Consumer: strong operations combined with seasonal factors continue to support outstanding performance, operations and positioning driving differentiation; (5) Data centers: stable performance, stable performance maintained by large customers and long-term contracts; (6) Transportation: good performance in new projects, performance differentiation continuing due to road network structure and passenger and freight structure; (7) Municipal: stable growth supported by essential needs, focus on actively improving operating projects; (8) Energy: resource endowment and regional electricity reform policies accelerating performance differentiation. Investment recommendations The strategy of new listings and allocation has shifted from "general selection" to "selective selection", with policy dividends being concentrated. Positive outlook for the performance of the REITs market in the first half of 2026, focusing on the three main themes of "counter-cyclical", "highly prosperous", and "strong expansion fundraising": (1) Stable molecular end, sectors with strong counter-cyclical properties, including consumer infrastructure, policy-supported rental housing, municipal environmental protection sectors; (2) Sectors with high prosperity in line with national strategic direction, such as the data center sector, as well as some assets with marginal recovery in prosperity: including some warehousing and logistics projects and highways; (3) Benefiting from policy-oriented public REITs as a long-term strategic value of the "asset listing platform", the strong demand for original equity expansion, and related assets with high-quality reserves. Risk analysis 1. Risks of slower-than-expected approval and issuance progress; 2. Risks of policies being less than expected; 3. Risks of fluctuations in the secondary market.