A Case Study On The Asset Securitization Of The CIFI’s Long-rental Apartment

China continuously strengthens the regulation of real estate,insisting on “staying and not speculating” and vigorously supporting the development of the long-term rental apartment market,thus the real estate companies have developed the long-rental apartment market.However,the long-term rental apartments have financing problems with long profit cycle and slow capital recovery.Meanwhile,the financing policy of the real estate industry is severe,which restricts the development of the long-rent apartment business.Asset securitization,especially REITs,which is the innovative financing tool can effectively solve this problem,and the government also actively encourages real estate companies to try REITs and create a loose policy to promote the development of REITs.This paper takes the first private long-rent apartment enterprise-Gaohe Chenxi-CITIC Securities-Lingyu No.1 asset supporting special plan as the case study object,and analyzes its motivation,product plan and impact.Then summarize the relevant experience and inspiration.This article is divided into three parts as followed:The first part is case introduction.First of all,standing from the background of the industry,this paper sorts out the development of the long-rent apartment industry from the demand,the main supplier and the mode of operation.Then the paper introduces the strategic layout and financing difficulties of the long-rent apartment of CIFI,and points out that CIFI promotes the development of long-rent apartment business through long-rent apartment asset securitization based on REITs.Finally,the paper elaborately describes the long-rent apartment REITs project which was successfully launched by CIFI,including the release process and the key elements to the project.The second part is case analysis.This paper sufficiently describes the case of the long-rent apartment asset securitization of the Lingyu No.1 REITs.First of all,the motivation for the launch of REITs is mainly to meet the CIFI’s strategic needs “One Body and Two Wings” and to enhance the brand value of CIFI’s long-rental apartment and to get rid of the long-rental apartment business financing dilemma.Secondly,the paper analyzes there lease scheme which has been rationally designed and has some innovations on the transaction structure.Besides,the scheme is relatively stable in the asset operation and the repayment guarantee policy for investors is also more effective.The above strengths show that it is a good reference for other companies.Finally,the paper analyzes the impact of the launch of REITs and finds that REITs financing can reduce the financing cost of enterprises to a certain extent,and has a buffer effect on the policy and legal risks of the real estate enterprises financing,however,it also brings maturity mismatch and excessive financing risks which those financiers should be aware.The third part is case revelation.On the basis of the above analysis,this paper summarizes the relevant experience and enlightenments,which may provide the relevant reference for the real estate enterprises to carry out long-rental apartment asset securitization,and also makes some suggestions to the regulatory authorities.