A Study On REITs Financing Mode In The Low-rent Housing Construction

Low-rent housing is the focus of affordable housing, the construction andinvestment of the low-income families have great and profound significance forsolving housing demand problem. At present, the government as the sole financingchannel can’t satisfy the demand of investment, so it is imperative to expand newfinancing channel, and this provides conditions for private sector through marketmeans to enter the low-housing construction area.This article based on the public goods and private capital motivation utilitytheory, and then use the principle of operation of REITs to focusing on the REITsfinancing mode research. First, the author has analyzed the related, and thenelaborated the REITs financing operation principle, its introduction, characteristicsand classification. Second, the author has discussed the necessity and feasibility of thelow-rent housing REITs financing mode in China, low-rent housing financing hugefunding gap and the cost advantage of REITs in China make the use of necessary forlow-rent housing construction. And then this article has done an analysis of the feasible offinancing model of low-rent housing construction in China from external environment andin-house condition two respects. Also, having based on the reality of our country, thisarticle has designed low-rent housing of REITs financing mode in China in fouraspects, such as establishment form, profit mode, portfolio and run frame, and thenhas given an analysis of REITs model in the performance of the main functions andmutual relation. Finally, in view of our country low-rent housing financing currentsituation, this article has put forward to applied countermeasure and proposal ofREITs financing mode in the low rent-housing construction.Have given an analysis to the theoretical model and empirical analysis, thisarticle has used the connotation return rate, rate of return on total assets indicators andinvestment yield index to the feasibility of low-rent housing financing model in REITs.This paper has argued that the low-rent housing asset growth rate, the rental yield,financing cost, income tax debt leverage and the holding time of investors and so oncan have great affect to level of gain of the REITs financing model in low-renthousing. The preferential policies in taxes and land costs by government can improvethe advantage of financing cost, also the rental yields and value-added rate of low-renthousing assets will increase the income level of financing mode. A moderateproportion of debt can get positive financial leverage effect and to prolong the holding time of investors can reduce the volatility of earnings.