Reporter Xing Meng
On July 16, nine units including the Hainan Provincial Department of Housing and Urban-Rural Development jointly issued the “Implementation Opinions on Accelerating the Development of Affordable Rental Housing”, clearly proposing to explore the development of real estate in the field of affordable rental housing under the premise of controlling risks. Pilot work on investment trust funds (REITs).
In June last year, after the subsidized rental housing was included in the pilot project of infrastructure REITs, the relevant pilot work was gradually launched across the country. According to the incomplete statistics of public information, as of July 17 this year, 12 provinces including Zhejiang, Guangdong, Shandong, Shanghai, Jiangxi, and Hunan have clearly stated in the policies related to accelerating the development of affordable rental housing to support the development of affordable rental housing. Pilot housing REITs.
Revitalize stock assets
Promote the realization of a virtuous circle of investment and financing
Affordable rental housing REITs are real estate investment trusts whose underlying assets are affordable rental housing projects. Indemnificatory rental housing is different from ordinary rental housing in the market. It aims to solve the housing problems of new citizens, young people and other groups. It belongs to “policy rental housing” and is supported by the government in terms of land, finance, taxation, finance and other policies.
“The development of affordable rental housing REITs can revitalize existing assets, drive incremental investment, and form a closed-loop capital chain for the affordable rental housing industry, thereby realizing a virtuous cycle of investment and financing.” Lawyer Meng Xianshi, partner of Zhong Lun Law Firm, told Securities Daily “The reporter said.
In November 2021, Zhejiang proposed to support eligible affordable rental housing projects to apply for the pilot project of real estate investment trusts (REITs) in the infrastructure sector; in December of the same year, Jiangxi proposed to encourage affordable rental housing projects to apply for real estate investment trusts in the infrastructure sector Funds and real estate investment trusts (REITs) pilot; in February this year, Chongqing proposed to launch a pilot project of affordable rental housing infrastructure REITs.
“Promoting the pilot project of affordable rental housing REITs will help promote the supply-side structural reform of the housing rental industry. It can not only solve the problems of people’s livelihood in a targeted manner, promote urban rental balance and divert housing demand, but also solve the problem of rental housing to a certain extent. The yield problem faced by housing.” Fu Rao, executive director of the Hong Kong International New Economic Research Institute, told the “Securities Daily” reporter.
Liu Chunyan, associate professor of Tongji University Law School, said in an interview with a reporter from Securities Daily that the development of affordable rental housing REITs is mainly to promote the development of the affordable rental housing market, and the future prospects of the market mainly depend on the underlying assets, namely the rental income of affordable housing. For investors of affordable rental housing REITs, their returns depend on the rental income of affordable housing. Therefore, the rational design of affordable rental housing REITs is particularly important.
The first two projects are waiting for registration
Expect more opportunities this year
Judging from the pilot situation, the two first batch of affordable rental housing REITs projects in the country have been reviewed and approved by the Shanghai and Shenzhen Stock Exchanges recently, and they are only one step away from registration and issuance.
Specifically, the application time (May 27) and acceptance time of the Hongtu Innovation Shenzhen Talent Housing Security Rental Housing Closed Infrastructure Securities Investment Fund Project and the CICC Xiamen Security Rental Housing Closed Infrastructure Securities Investment Fund Project (May 30) Unanimously, the former was approved by the Shenzhen Stock Exchange on July 11, and the latter was approved by the Shanghai Stock Exchange on July 14.
“It is expected that 2022 will be the first year for the public offering of affordable rental housing REITs, and the public offering of REITs will promote the development of my country’s housing leasing industry into a new era.” Meng Xianshi said, first of all, through public offering REITs, the mature heavy assets will be packaged and listed on the market. , revitalize the stock assets, realize the separation of “light and heavy assets”, and make housing leasing companies more focus on improving asset operation and management capabilities. Secondly, REITs are also an active management tool. Through the issuance of products on the open market, the information disclosure requirements are clear and transparent, which can help improve the efficiency of operation and management. At the same time, in order to improve the profitability of REITs, it will promote housing leasing companies to focus more on improving their operational capabilities. Third, as an active management tool, since the annual income distribution ratio of public REITs is not less than 90% of the annual distributable profits, it is actually a new REITs rent dividend logic to change the high turnover sales logic of traditional real estate, so as to avoid Real estate prices and rents are expected to rise too fast, which is also the main reason why REITs are considered to be stabilizers of the long-term healthy development of the real estate market. Finally, the expansion mechanism of REITs will bring more opportunities and imagination to the housing rental market.
Fu Rao believes that although REITs products have stable returns and moderate risks, factors such as macroeconomics and interest rates will have an impact on the market performance of REITs products. Investors should still look at them rationally, and should not blindly follow the risks of investment based on the characteristics of the products themselves.