Research On The Financing Model Of Infrastructure REITs Used By Zhejiang Expressway Company

As a representative heavy asset of infrastructure,highway has a large initial investment and a long investment cycle.With the rapid development of China’s economic construction and the continuous expansion of high-speed networks,relying on traditional investment and financing methods,the mainstream channel for bank-based indirect financing to form huge constructive liabilities is difficult to maintain.Based on the experience of overseas developed markets,REITs financing models can revitalize existing assets,innovate corporate financing channels,and alleviate corporate funding needs.At present,it is time for my country to encourage the development of infrastructure REITs.However,due to factors such as legal framework restrictions,my country has not yet launched public offering REITs products,and the current private equity REITs are the mainstream in the market.On September 23,2019,the company successfully issued,which was the first domestic infrastructure REITs product.As the first infrastructure REITs,its successful issuance is of great significance.Based on this background,this paper selects this REITs project as the main body of the case analysis.As an innovative financing tool,this article analyzes the characteristics of its underlying assets,transaction structure,and credit enhancement measures;it analyzes the financing effect of the REITs project in the company from four dimensions: financing interest rate,financing amount,tax shield effect,and market response.It was found that the amount of financing was low due to the sub-shares being fully subscribed by itself,and the financing interest rate was relatively high compared with other financing tools due to the principal amortization,but at the same time it also enjoyed tax shield income,and the market reaction was also positive.Then this article analyzes the advantages and possible problems of the project based on the financing effect.In order to explore the underlying reasons for the low share of priority levels and the low actual financing amount,this article analyzes the priority levels of this REITs projects.The option adjustment static spread method based on Monte Carlo simulation is used to analyze the rationality of its valuation and pricing.In the process,it is found that its theoretical value is close to the actual value,which indicates that its pricing is reasonable.On the basis of reasonable priority tier pricing,this article assumes that the coupon rate remains unchanged,and the scenario assumes that the priority tier’s share is increased to 50%,55%,and 60%.Compared with the project’s predicted net operating cash flow,three scenarios are calculated.Under the cash flow coverage multiple.It is found that increasing the proportion of priority shares will significantly reduce the cash flow coverage multiple,and in the short term it may even be less than 1.It is concluded that the proportion of the priority of This REITs project to the share of asset-backed securities is reasonable and is for investor risk need for coverage.Finally,this article puts forward some prospective suggestions for the development of infrastructure REITs based on the problems in the financing model of REITs discovered by the research: In terms of basic asset selection,choose high-quality and suitable infrastructure as the underlying assets,in terms of suggestions for relevant laws and regulations;It is recommended to clarify the legal procedures for the transfer of basic assets involved in the establishment of infrastructure REITs;in the recommendations to the government,it is recommended to provide certain tax preferential policies based on the public attributes of the infrastructure;finally,this article proposes to establish reasonable pricing Valuation system to promote the liquidity and good development of the infrastructure REITs market.