Case Analysis Of Public Rental Housing REITs

The report of the 19 th National Congress of the Communist Party of China proposes to accelerate the establishment of housing system to allow all people to live in their own houses.In recent years,in order to establish a long-term mechanism for the healthy development of the real estate market and ensure that all people live in their own houses in the country,China has vigorously developed public rental housing and continuously improved the housing security system.However,in the construction and operation of public rental housing,the existing financing channels cannot meet the huge capital investment required for construction,which makes it difficult to promote the construction of public rental housing.In November 2018,Shenzhen Talents Housing REITs issued and listed Shenzhen talents houses as the underlying asset,and explored the use of REITs to support the sustainable development of public rental housing.By studying on the development and financing of public rental housing in China,we can find that after more than ten years of development,public rental housing has gradually occupied an important position in Chinese affordable housing construction system.The lack of financing channels and financing system has led to the slow progress of public rental housing construction.Drawing on the mature experience of public rental housing financing in the United States,Sweden,Singapore and other countries,in the future construction of public rental housing financing systems,it is necessary to strengthen the construction of laws and regulations related to public rental housing,establish a professional public rental housing management system,and build a scientific and comprehensive housing financial system is used to promote the improvement of public rental housing financing models.The case study method is adopted to the Shenzhen Talents Housing REITs,which mainly analyzes the five aspects of project transaction structure,bankruptcy isolation measures,credit rating measures,exit mechanism and interest coverage multiples.The project optimizes the transaction structure and adopts structured tiering,which provides effective credit enhancement for the special plan;it matches the fund management and active investment functions to lay the foundation for the sustainable development of the project and the underlying assets;the shelf-type issue improves the issue efficiency;the main advantage of the original equity owner provides effective credit enhancement and reduces issuance costs;the property and lessee groups can promote the growth of comprehensive cash flow.However,the stability of rental income in the project is susceptible to a variety of factors such as administrative efficiency,and there are also problems such as constraints on credit guarantees,excessive investment thresholds,and inability to obtain value-added benefits.Corresponding suggestions are proposed for these issues.Shenzhen Talents Housing REITs have a positive demonstration effect,showing the huge asset reserves and continuous issuance potential in the field of public rental housing.In order to further promote the development of public rental housing REITs,the design and structure of the institutional framework system is also needed.Therefore,the following policy recommendations are proposed: strengthen policy support and promote the development of Chinese public rental housing REITs;improve the legal and tax system supporting measures for public offering REITs;establish and improve public rental housing financing management system to promote the formation of a good financial ecology;carry out the talents housing REITs pilots and focus on asset value enhancement;carry out multi-regional public rental housing REITs pilots and accumulate rich experience.