“China Securities Journal” recently published an article “Policies Continue to Make Efforts to Promote the Transformation and Development of Real Estate”. The article stated that on November 29, real estate stocks set off a wave of daily limit, and drove other industry sectors to strengthen. This is not only a direct response from the market to the optimization and adjustment of real estate financing policies, but also an intuitive reflection of improved market expectations and increased confidence. Previously, the China Securities Regulatory Commission announced the adjustment and optimization of five equity financing measures to support the stable and healthy development of the real estate market.
Industry insiders believe that the stable and healthy development of the real estate market is related to the stability of the financial market and the overall economic and social development. Recently, from the “first arrow” bank credit support, to the “second arrow” bond financing assistance, and then to the “third arrow” equity financing restart, continuous efforts have been made, step by step, to form a three-dimensional financial Supporting the “combination boxing” will speed up the mitigation of industry risks, promote the transformation and development of the industry, and stabilize the real estate market faster, thereby better stabilizing the economic market.
Prevent and defuse risks
Real estate not only acts as the “ballast stone” of the national economy, but also a potential “gray rhinoceros”. Experts in the industry explained that due to the long chain of real estate, large financing scale, close connection with finance, and wide involvement, the occurrence of financial risks is easy to spread. One of the important significance of the introduction of the five equity financing support measures is to improve the equity financing of real estate companies and mitigate the risks in the real estate sector.
Among the five measures, the “two restorations” – “recovery of mergers and acquisitions and supporting financing of listed real estate companies” and “resumption of refinancing of listed real estate companies and listed real estate companies” have received particular attention.
Tian Lihui, dean of the Institute of Financial Development of Nankai University, analyzed that while resuming mergers and acquisitions and supporting financing and refinancing, the China Securities Regulatory Commission has made it clear that the raised funds can be used to supplement corporate working capital and repay debts, which is conducive to improving the cash flow of real estate companies and alleviating the financial crisis. The tight liquidity situation prevents the spread and escalation of real estate risks.
“Private real estate companies, whose capital chain continues to be tight, have ushered in a ‘breathing period’.” The Yihan Think Tank report believes that the regulatory authorities have made it clear that the funds raised can not only be used to “guarantee the delivery of buildings”, but also be used to supplement working capital and repay debts. It helps real estate risks gradually shift from spreading to restraining and mitigating.
From the perspective of industry insiders, measures such as adjusting and improving the overseas listing policies of real estate companies will also play a positive role in relieving the liquidity difficulties of real estate companies and defusing industry risks. Liu Shui, head of research at the Enterprise Business Department of China Central Finger Research Institute, said that resuming refinancing of H-share listed companies with real estate as their main business will support real estate companies to make better use of overseas market resources, which will help real estate companies to carry out multi-channel financing and take multiple measures simultaneously Alleviate short-term liquidity tension and avoid expansion of industry and individual risks.
“The China Securities Regulatory Commission’s introduction of five measures to support real estate equity financing is of great significance to the entire industry. It is believed that increased support for various types of financing, including equity financing, will effectively promote real estate companies to solve their funding problems, speed up the clearing of risks, and give The industry took the key ‘respite’ opportunity to accumulate energy to get out of the predicament.” said Zhang Bo, director of the branch of 58 Anju Guest House Property Research Institute.
Revitalize stock assets
In addition to preventing and defusing risks, promoting the revitalization of the real estate market is also regarded as a major aspect of the equity financing support measures. According to industry insiders, further exerting the role of REITs in revitalizing the stock assets of real estate companies will not only improve the balance sheets of real estate companies, but also help promote the transformation and development of the industry and promote the coordinated development of real estate and the real economy.
Li Yujia, chief researcher of the Guangdong Provincial Housing Policy Research Center, believes that encouraging high-quality real estate companies to rely on qualified warehousing and logistics, industrial parks and other assets to issue infrastructure REITs will not only help real estate companies recover their investment earlier, but will also play a role in the investment process to a certain extent. Encourage and guide the transformation of real estate developers.
“Issuing REITs can achieve a closed loop of project development and exit without increasing debt, and promote the formation of a new model of ‘development, operation, and revitalization’ for the sustainable development of the real estate industry.” Tian Lihui believes that through the development of the REITs market and real estate private equity investment funds It is both feasible and necessary to revitalize the real estate stock assets and explore new paths for real estate development.
Li Yujia believes that promoting the regular issuance of guaranteed rental housing REITs and striving to create a “guaranteed rental housing sector” in the REITs market may mean that there will be policy innovation and optimization in terms of REITs issuance conditions in the future. Tian Lihui believes that the construction of the REITs market for guaranteed rental housing in the future will be a key area for the reform and development of the capital market.
In terms of revitalizing stock assets, the China Securities Regulatory Commission proposed to actively play the role of private equity investment funds. Zhu Jin, chief analyst of the real estate industry of China Securities Securities Co., Ltd., said that this policy can introduce new funds for residential and commercial real estate, revitalize the stock of operating real estate of real estate companies, and help the healthy development of the industry.
Support the healthy development of the industry
Based on the opinions of industry insiders, the introduction of a series of equity financing support policies will effectively improve the real estate financing environment, enhance the quality of industry development, and support the stable and healthy development of the real estate market.
On the one hand, the support for real estate companies continues to increase, and the financing environment may usher in major changes. According to Zhang Bo’s analysis, with the strengthening of policy support, the cash flow pressure of real estate companies will be further alleviated, and the real estate market will be promoted to resume stable and healthy development. Zhang Yu, Chief Analyst of the Real Estate and Space Services Industry of the Research Department of CICC, believes that real estate companies, especially high-quality real estate companies, are expected to realize their assets under the circumstances of recovery of operating cash flow, improvement of debt financing cash flow, and supplementation of equity financing cash flow. The balance sheet has improved and entered into a virtuous cycle of risk mitigation and sustainable development.
On the other hand, after the implementation of this round of policies, the real estate industry will accelerate the survival of the fittest and improve the quality of industry development. Tian Lihui pointed out that after the resumption of real estate mergers and acquisitions, some financially distressed companies with acceptable asset quality may become potential targets for mergers and acquisitions, while those small real estate companies that are insolvent and chaotic in management will be liquidated at an accelerated rate.
Promoting the stable and healthy development of the real estate market is not only the expectation of the real estate industry itself and the upstream and downstream industrial chains, but also the requirement of stabilizing the overall economic and financial situation. Zhang Yu said that in the short term, after a series of policy “combination punches” are launched, it will help reverse the risk of rapid downturn in the real estate market and stabilize the supporting role of the real estate industry on the macroeconomic market; in the medium and long term, it will help build a multi-level real estate market. The financing system promotes the formation of a new development model for the real estate industry and enterprises. (Finish)