Researching On Real Estate Investment Trust (REITs) Financing

In recent years,the real estate market has entered a regulatory period after experiencing explosive growth.After the Nineteenth National Congress set the tone of "houses are for living,not for speculation",various regulatory policies came in succession.Among them,the severe or even suspension of real estate mortgage loan services can be said to be a bottom drawer,which greatly limits the financing ability of real estate enterprises,and brings greater pressure to the cash flow of enterprises.With the continuous advancement of financial innovation,the Chinese version of Real Estate Investment Trust Fund(REITs)was born,which provides a new financing channel for real estate enterprises.Based on the asset-backed securities of the Real Estate Trust and Investment Fund(REITs)of Xingye Wanxin Yuejia issued by the Stateowned listed company Wanxin Media,this paper analyses the financial motivation and financing process of Wanxin Media's REITs from the perspective of combining the product financing and trading structure,and puts forward some relevant thoughts on the financing methods of REITs.It also provides reference for other enterprises to use REITs for financing and transaction structure design.On the structure of the article,this paper introduces the concept and characteristics of Real Estate Trust Investment Fund(REITs),and systematically analyses the REITs,focusing on financing and trading structure.Firstly,it analyses the current operating environment and financial situation of Wanxin Media,the issuer,as well as its financing needs and financing difficulties.Then,it compares REITs with traditional financing methods,and analyses the advantages of REITs financing methods.Secondly,the transaction structure of the REITs is analyzed,and the overall transaction structure,structural design principles,existing risks and mitigation measures are analyzed.Thirdly,the domestic REITs are compared with the international mature market REITs,and the shortcomings and development direction of domestic REITs are analyzed.Finally,based on the summary of the cases,the full text is summarized and relevant suggestions and thoughts are put forward.Through the analysis of the first domestic REITs project of Wanxin Media listed on the national inter-bank market,this paper holds that financing by means of REITs can break the financing dilemma,activate the stock assets,and use the high-quality assets of enterprises to finance to improve the reinvestment rate of enterprises and realize the light assets operation of enterprises.on the other hand,compared with traditional loans,financing by means of REITs can improve the reinvestment rate of enterprises and realize the light assets operation of enterprises.With the characteristics of off-balance-sheet financing,REITs has the advantages of not increasing the financial risk of enterprises and not decentralizing the control rights.Also the cost of capital is relatively low.Especially in the context of real estate regulation,REITs can provide reference for the enterprises which need to finace by real estate.In terms of transaction structure design,the REITs constructs the structure which achieves the pre-tax deduction effect of income tax by constructing debt to form financial expenses,and achieves the purpose of tax planning.By transforming the cash flow of rental income of equity nature into the cash flow of debt nature for principal and interest repayment of entrusted loans,asset-backed securities form a credit boost,which reduces the cost of capital and provides a reference for the design of REITs trading structure.This kind of transaction structure design is worth learning and promoting under the premise of lacking preferential tax policy at present.