| In recent years, the real estate industry has been developed into one of the pillar industries of China. As a typical capital-intensive industry, real estae cannot get developed without a plenty of capital. While the capital source for real estate in China is very limited to bank loans only, its use of the capital market and direct credit has been far lagging behind. As such, the risks from real estate industry may be excessively transferred to the bank system and even do a big harm to the financial system stability. Seeking multiple capital sources to fund real estate development and operation by introducing new financial tools has being become an urgent topic of property developers and investment bankers. At the same time, no doubt it is realized to be a necessity to establish a system to efficiently allocate rights and responsibilites to parties involved, diversify the risks, and balance the profits so as to achieve a win win situation between property developers, financial institutions and investors. Originated from United States, a Real Estate Investment Trust, REIT, is a company or a trust or an investment fund dedicated to professionally investing real estate with funds collected from issuing shares or notes. REIT is a mature and successful direct financing tool for real estate industry, and concurrently it can satisfy the investment needs of individual investors, and increase the capital reserve ratio, diversify the risks and resolve the liquidity problem of banks. Although the sub-prime crisis outbroke in United States in last year, the crisis has no direct relationship between the assets securitization. Implementation of assets securitization shall not directly lead to the sub-prime crisis and it is not the assets securitisation's fault. Considering from the long term development of our financial system, we shall at one hand learn lessons from the sub-prime crisis and at the other hand actively and stably carry forward the development of REITs in China. |
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