Grandjoy Holdings Group Co., Ltd. (000031.SZ) has announced plans to file for the issuance of commercial real estate REITs, using its Tianjin Joy City shopping center as the underlying asset.

The company stated on July 27 that its majority-owned subsidiary, COFCO Property Investment Co., Ltd., will serve as the original equity holder. The REITs will be backed by Tianjin Joy City, a shopping mall held by the wholly-owned subsidiary Grandjoy (Tianjin) Co., Ltd.

This move is in response to the commercial real estate REITs pilot policy issued by the China Securities Regulatory Commission on December 31, 2025. The company said the transaction aims to unlock the investment value of mature properties and does not constitute a major asset restructuring or a related-party transaction.

Under the proposed structure, COFCO Property will establish a wholly-owned special purpose vehicle (SPV) company. CITIC Securities will act as the plan manager to set up an asset-backed securities (ABS) plan, which will hold 100% of the SPV's equity. The public fund will be initiated by China Asset Management Co., Ltd., which will subscribe to all shares of the ABS plan.

The ABS plan will use the raised funds to increase capital into the SPV and provide shareholder loans. The SPV will then acquire 100% equity of Grandjoy (Tianjin) from COFCO Property. Subsequently, Grandjoy (Tianjin) will be merged into the SPV.

The transferor, COFCO Property, was established on February 15, 2007, with a registered capital of RMB 5 billion. The target company, Grandjoy (Tianjin), was founded on April 13, 2004, with a registered capital of RMB 1.12 billion.

The underlying asset, Tianjin Joy City, is located at No. 2 and No. 6, Nankai Outer Street, Nankai District, Tianjin. Its primary business model involves leasing out space in the self-owned shopping center to tenants, providing rental, property management, and promotional services in exchange for rental income, property fees, and other charges.

Project operations will be managed by Grandjoy Commercial Operation Management (Tianjin) Co., Ltd.

Regarding fund share distribution, the original equity holder or its affiliates under common control will subscribe to no less than 20% of the fund shares. Of this, 20% of the total shares issued will have a lock-up period of at least 60 months from the listing date, while the portion exceeding 20% will have a lock-up period of at least 36 months. These shares cannot be pledged during the holding period.

Professional institutional investors participating in the strategic placement will have a lock-up period of at least 12 months from the listing date.

For income distribution, the commercial real estate REITs must distribute at least 90% of the annual distributable fund income to investors in cash. Distributions will occur at least once per year, provided distribution conditions are met.