The China Securities Regulatory Commission has issued an announcement launching a pilot programme for commercial real estate real estate investment trusts (REITs), establishing a product definition, fund registration and operational requirements, and an oversight framework. The announcement defines commercial real estate REITs as closed-end, publicly offered securities investment funds that hold commercial real estate to generate stable cash flows and distribute returns to unitholders. It sets requirements covering fund managers and custodians, due diligence, application materials and commercial real estate-related conditions, and it specifies the fund manager’s active operational management responsibilities. The framework also tightens accountability for fund managers and other professional institutions through compliance with professional standards and regulatory requirements, and assigns supervisory, risk monitoring and risk disposal responsibilities to relevant regulators. Other matters are to follow the trial rules under the Guideline on Publicly Offered Infrastructure Securities Investment Funds. The announcement follows a public consultation, with the CSRC stating that feedback broadly supported the approach and that reasonable comments were incorporated. The CSRC will focus next on implementing the regime.

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