Research On The Application Of REITs In Financing Of Long-term Apartments In China-

The promotion of urbanization has aroused the residents' housing rental demand.However,the contradiction between the high quality demand of the housing lease and the uneven and inadequate development of the real estate leasing market is becoming more and more prominent.In order to standardize and promote the development of the housing rental market,China has formulated a series of relevant policies from 2015,including the multi-agent supply policy,the rent and sale simultaneously system and the commercial housing to renting policy and so on.Because of the brand operation,fine management and standardized after-sales service,long rented apartments which can better meet the high quality demand of leaseholders,is considered to have a bright future,However,it still faces many problems,such as long payback period,high financing cost and narrow financing channels.Therefore,the development of REITs has become a long solution,as the best mode of renting the capital of the apartment.Based on the principal-agent theory,bankruptcy isolation theory and credit enhancement theory,this paper analyzes the current status and problems of the REITs development of the domestic and foreign long rented apartments,and through the analysis of the new apartment REITs case to verify the feasible ways of the long rented apartment to obtain capital market support.Combined with China's current policy environment and learning from the American model,a suitable REITs mode of long rental apartments for China is constructed in this paper.The research found that:(1)Strong consumption demand,support of national policy and extensive participation of institutional investors have promoted the rapid development of the long rented apartment market in China,but there are also problems such as large investment,high operating cost,low return on rent,slow capital return and so on,especially financing difficulties and narrow financing channels.The scale development of the long rented apartment has been greatly restricted,and the REITs in the long rented apartment in US,with the characteristics of stable income rate,high liquidity and neutral tax,have provided a reference to the financing of the long rented apartment in China.(2)Based on the current policy environment and the development status of long rented apartments,the REITs model of long rented apartments in China is constructed.That is,the choice of the underlying assets of REITs should focus on long,concentrated.asset-heavy apartments with good areas and high rents;the organizational form should adopt the contract type of REITs;the management mode should choose the internal and external combination mode;the trading structure should adopt double SPV structure plus credit enhancement measures;the non-public offering should be adopted in the way of collection and equity REITs is used for capital purposes.(3)For the new apartment REITs,"special asset management plan + contract private fund" double trade structure could better fit the current policy system environment and the needs of the investment and financing participants in China.This project transaction structure involves three main principal-agent relationships,namely,the plan manager and the investor,the custodian bank and the plan manager,the custodian bank and the fund manager;based on the theory of bankruptcy isolation,the transaction structure "real sale" of the underlying assets,achieving the effect of the separation of the underlying assets from the bankruptcy risk of the original equity holders;based on the theory of credit enhancement,through the structured hierarchy design,covering,excess reserves of cash flow mechanism,the asset underlying assets mortgage,mortgage of accounts receivable and advance disposal mechanism,the trade structure achieves the internal and external credit enhancement path.The right decisions to complete the fund exit,innovative financing channels to reduce the cost of capital,full use of the dividend policy,the asset innovation gene and assets credit rating is the main experience of its success.But there are also some shortcomings,such as relatively small financing scale,lack of storage and issuance mechanism,large influence of target assets,and obvious influence of property rental income on asset portfolio quality.