A Study Of Peng Hua Qian Hai Van Ke REITs' Structure And Its Risk

Real Estate Investment Trusts(REITs)is a financial product that came out of the United States in the 1960s.With many politic advantages,it has developed rapidly during the last 40 years.And it has been the fourth financial product after cash,bonds and stock in the overseas market.The development of foreign REITs is very fast,while the domestic REITs exploration is also accelerating.In June 2015,Peng Hua Qian Hai Van Ke REITs was approved to issue.Peng Hua Qian Hai Van Ke REITs is an important innovation of China's real estate finance industry,especially as the first public offering REITs.This paper uses literature research method,statistical analysis method,comparative analysis method,model analysis method and risk analysis method to study Peng Hua Qian Hai Van Ke REITs' structure and its risk.This paper discuss the structure and its risk from four aspects:underlying asset,investment and revenue,financing cost and organization form.In the aspect of underlying asset,the underlying asset of Peng Hua Qian Hai Van Ke REITs is income right of the BOT project which lead to legal risk.And REITs doesn't have the property right of the BOT project.The underlying assets did not achieve a real sale and risk isolation.Moreover,Peng Hua Qian Hai Van Ke REITs cannot obtain the value added income of underlying asset because of the loss of the property right.In the aspect of investment and revenue,the investment in real estate of Peng Hua Qian Hai Van Ke REITs is only 23.32%.Much lower than the 75%standard line in the United States.The lower real estate assets are not matched in the name of REITs,which will inevitably mislead investors.And it have only one property which lead to unsystematic risk.While lower real estate asset means larger stocks,debt investment,which enhance the market fluctuation risk of Peng Hua Qian Hai Van Ke REITs.In the aspect of financing cost,it is calculated that the cost of Van Ke sells the BOT project rental income to obtain the current liquidity is about 8.4%,which is much higher than the ROA,The higher cost means that the profits of various intermediaries are compressed,and this high yield is also difficult to support.Moreover,in order to get a good feedback,Peng Hua Qian Hai Van Ke REITs obtain a tax preferences that cannot be duplicated by other REITs.In the aspect organization form,Peng Hua Qian Hai Van Ke REITs choose the form of contractual organization on account of the simplicity of found and exemption of dual taxation.But the form of contractual organization has a larger risk,which makes it difficult for investors to supervise investment behavior.By analyzing Peng Hua Qian Hai Van Ke REITs' structure and its risk,we can easily find that there are many problems have not yet been resolved compare to the mature REITs.The purpose of this paper is to provide advice for the future development of REITs in China by analyzing the Peng Hua Qian Hai Van Ke REITs.