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A Study On REITs Which Applying To Finance Mode Of Public Rental House

Posted on:2014-06-24Degree:MasterType:Thesis
Country:ChinaCandidate:Y C BaoFull Text:PDF
GTID:2269330425993019Subject:Investment economy
Abstract/Summary:PDF Full Text Request
Since2010,the construction of public rental housing has taken more and more proportion in the total quantity of the indemnificatory housing, it has become an important part of indemnificatory housing. The objects that public rental housing indemnifies are migrant workers and graduates who are called "sandwich class" that could not satisfy the conditions of low rent housing or have enough money to buy affordable housing. The characters of public rental housing are huge investment, long payoff period and low profit. The emphasis of finance of public rental housing is how to change the situation that the capital of construction of public rental housing mainly comes from government finance to private capital.By the study of the situation of the public rental housing’s development and the finance modes of it that advise to introduce the REITs(Real Estate Investment Trusts),this paper indicate that the rent of public rental housing is beyond the ability of "sandwich class", which leads the public rental housing could not indemnify the habitation of "sandwich class" effectively. So the rent of public rental housing should be reduced. On this condition, it could not meet the rate of the return of investors who invest to REITs that is introduced directly. In practice the REITs used in the finance of public rental housing could not attract the private capital. Against this background, this paper does the studies below:First of all, to solve the problem, this paper puts forward a finance mode called SF-REITs associated with analysis of the cost of public rental housing:the land of public rental housing program is not free anymore, but be sold to the program on the market value, then the REITs will buy the program and the profit of land should be set up a fund called "Public Rental Housing Subsidy Fund"(here after refer to as Subsidy Fund)that is in charged in giving the subsidy to REITs to enhance the return of it. The Subsidy Fund would operate as National Social Security Fund. The higher rate of return of REITs will attract private capital to the construction and operation of public rental housing.Secondly, this paper introduces the operation process of the SF-REITs finance mode and suggests that REITs could be set up as closed end fund and then be transferred to open ended fund which could be listed in the condition of the market and law situation in China. In the same time, analyzing the influence of finance mode to the government’s, the investors’and the renters’benefit. This paper believes that the SF-REITs finance mode could relieve the finance pressure of government, enhance the return of investors, lower the rent burdens of tenants and strengthen risk control of the program. The ownership of public rental housing is transferred from government to social investors such as REITs, which could increase the efficiency of operation of it.Thirdly, working out the equation showed the relationship between the internal rate of return(IRR) and rent of public rental housing in the tow situations that SF-REITs finance mode and REITs finance mode is applied to the public rental housing program Minxin Jiayuan Residential Community in Chongqing. Drawing conclusion that the IRR of SF-REITs finance mode is higher than the REITs finance mode in the rent, the SF-REITs finance mode is feasible from the point of REITs. And analyzing the main factors that could influence the IRR of SF-REITs finance mode in the meantime, such as the ratio of land and building cost, yield rate of Subsidy Fund, return rate of selling the public rental housing to REITs and occupancy rate of public rental housing.At last, analyzing the difficulties that SF-REITS finance mode’s application in the current condition of our market and law, and putting forward the measures to overcome them.
Keywords/Search Tags:Public Rental Housing, Real Estate Investment Trusts, PublicRental Housing Subsidy Fund
PDF Full Text Request
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