A Study Of Financing Mode Of Real Estate Investment Trusts In China’s Commercial Real Estate

The real estate industry as the national economy important pillar industry, is atypical capital intensive industry, and compared to other industries, have thecharacteristics of huge capital demand and the turnover of capital long cycle, so the realestate industry development mainly relies on the finance of the real estate market.At present, our country is in economic structure transition, strengthening of thedomestic support, commercial real estate services as development platform, its demandincreases. At the same time, the rapid urbanization will also provide a vast space forcommercial real estate development. In contrast to the traditional real estatedevelopment, sales model obtained by disposable income, commercial real estateholdings management pattern can bring greater profits, including continuous achievedoperating rental income, asset price appreciation and the appreciation of land has doubleprofit as well as the premium brand. Therefore, holdings management model of thecommercial real estate in our country has developed rapidly, real estate has become animportant branch.While commercial real estate developing quickly, it also brings a lot of problems,leading to the root cause of this problem lies in the commercial real estate developerstremendous financial pressure, but lack the ability to support commercial real estateoperation unified management platform of capital. Real Estate Investment Trusts(REITs) is an innovative financial instrument that rose from the1960s in the UnitedStates. It plays an important role in the field of real estate financing, especially forcommercial real estate. Through the issuance of REITs, commercial real estatecompanies can get a stable source of funds, which benefits them in long-termsustainable development.Firstly, this paper conducts the thorough research to the concept of commercial realestate and operation features, and make clear about the commercial real estatedevelopment trend-holdings management model. Then, according to the commercialreal estate development trends, the article analyses the commercial real estate financingcharacteristic. The commercial real estate has two different phases, respectively with thecash outflow development-construction stage and cash inflows mainly with operatingstage. Then, under the guide of the theoretical analysis, this paper analyzes China’scommercial real estate financing structure, status and financing problems. The main problem lies in that China’s commercial real estate financing channel is single,excessively relies on bank credit, and there is no financing instruments on the basis ofcommercial property’s characteristic, etc. Therefore, in order to ensure the long termhealth and sustainable development of commercial real estate in China, according tocommercial real estate financing law, commercial real estate financing mode must beestablished which can guide the direction and meet the financing needs of commercialreal estate.Finally, on the basis of feasibility of using REITs financing mode in China, throughthe study of REITs from the development experience of abroad, combining the maincommercial real estate development-construction stage and holding-operation stagefinancing characteristics, to REITs the basic operation process as the breakthrough point,from the REITs establishment stage, financing, investment, management stage,distribution of income level and exit stage, specific analysis of the REITs organizationstructure, operation mode, fund-raising, investment and profit distribution etc，thenproposed the present stage of China’s commercial real estate investment trust fund(REITs) stage financing patterns and some suggestions about this mode for commercialreal estate in China.