The market has been looking forward to it for a long time. Whats the advantage of REITs?
The so-called REITs, namely real estate investment trust fund, is a kind of trust fund that collects the funds of most investors by issuing income certificates, and hands them over to specialized investment institutions for real estate investment and management, and distributes the comprehensive investment income to investors in proportion. It is also an important means to realize real estate securitization.
It is understood that as early as 2002, some domestic trust companies have created related products. Since 2007, the domestic academic, practical and regulatory authorities have made more and more in-depth research on the functional positioning, operation mode, product design, regulatory rules and other aspects of Chinas REITs market, and even made many attempts. For example, at the beginning of 2009, the peoples Bank of China, together with relevant departments, formed the overall framework for the preliminary pilot of REITs. In 2011, the first REITs special account product appeared in China: UBS SDIC mainly invested REITs products in Asia Pacific region.
Jing Chuan, deputy general manager and chief economist of CUHK futures, agreed. In his view, since 2020, REITs has accelerated in terms of system construction. On April 30, the China Securities Regulatory Commission and the national development and Reform Commission issued the notice on promoting the pilot work of real estate investment trust funds (REITs) in the field of infrastructure, and issued supporting guidelines to specify that the pilot projects of infrastructure REITs should be carried out on a case by case basis in key areas. On August 3, the general office of the national development and Reform Commission issued the notice on the application of real estate investment trust funds (REITs) pilot projects in the field of infrastructure. On August 7, China Securities Regulatory Commission (CSRC) issued the guidelines on public offering of infrastructure securities investment funds (for Trial Implementation). The system of infrastructure REITs was formally established, and the Chinese version of REITs took an important step forward.
The guidelines clarify the responsibilities of all parties from multiple perspectives
There are 51 guidelines issued by the CSRC, which mainly regulate the product definition, qualifications and responsibilities of participants, product registration, fund share sale, investment operation, project management, information disclosure, supervision and management, etc.
First of all, the guidelines clearly define the product definition and operation mode. The guidelines clearly put forward that the product structure of public offering fund + infrastructure asset-backed securities should be adopted for public offering of infrastructure Securities Investment Fund (hereinafter referred to as infrastructure fund), and there is actual control relationship between fund manager and infrastructure asset-backed securities manager or controlled by the same controller.
The guidelines also pointed out that infrastructure funds should have more than 80% of the fund assets invested in infrastructure asset-backed securities, and obtain full ownership or management rights of infrastructure projects through special purpose vehicles such as asset-backed securities and project companies; fund managers should actively operate and manage infrastructure projects to obtain stable cash flow, and combine more than 90% of the funds assets in the year The amount for distribution shall be allocated to investors as required.
As for the above-mentioned operation mode, a person from a large-scale public offering fund in southern China said that the guidelines clearly implemented equity investment orientation in asset selection, scheme design, pricing and issuance. In terms of project due diligence, issuance, operation and letter approval, the guidelines clearly defined the dominant position of public funds, and provided liquidity through the secondary market trading mode. In terms of operation mode, the guidelines have already been in line with overseas countries Public REITs are no different, which is worth looking forward to.
Secondly, the guidelines are standardized from the perspective of fund managers and custodians. According to the guidelines, fund managers should not only have the ability of conventional public fund investment management, but also be equipped with no less than three main responsible personnel with more than five years experience in infrastructure project investment management or operation, and have sound and effective infrastructure fund investment management, project operation, internal control and risk management systems and processes. At the same time, fund custodians are required to have experience in custody of asset management products in the field of infrastructure, and provide sufficient professionals to carry out infrastructure fund custody business.
As a professional institution, the guidelines emphasize that fund managers should also strictly control project access, conduct comprehensive due diligence on the ownership, cash flow and operation of infrastructure projects. They can carry out due diligence jointly with asset-backed securities managers. If necessary, they can also hire securities companies with the qualification of sponsor business as financial consultants to make due diligence on projects u3002
In terms of product issuance, the guidelines provide pricing methods and offering arrangements, including defining strategic placement, offline inquiry objects, distribution of offering proportion, fund sales, and handling of raising failure. In terms of operation, on the one hand, it is necessary to standardize the operation of fund investment, including investment restrictions, loan arrangements, related party transactions, fund raising and other detailed requirements. On the other hand, it is necessary to strengthen the operation and management of infrastructure projects, allow fund managers to set up special subsidiaries to undertake the operation and management responsibilities of infrastructure projects, or entrust qualified external management agencies to take part of the operation and management responsibilities.
For the future of public REITs products, Wang Hongying, President of China (Hong Kong) Financial Derivatives Investment Research Institute, believes that the development prospect is huge.
Especially in the current special environment, in order to reduce the impact of European and American restrictions on Chinas economic expansion, China will naturally launch more infrastructure construction to maintain the stable growth of Chinas economy. He said that although infrastructure investment costs a lot, but the investment return period is generally longer, so there is a greater demand for infrastructure financing in various regions. In this case, to promote the development of REITs, an innovative financial instrument, has enriched the means of local financing to a certain extent, which can provide a lot of funds for the infrastructure construction of our country.
On the other hand, considering that REITs also pushes stable and long-term infrastructure assets to the capital market, it provides investors with financial products that can be allocated for a long time, with stable dividends and transparent management. It can also provide an effective supplement to Chinas capital market, and can change the situation that infrastructure investment was mainly dominated by finance to a certain extent.
Under the current financial pressure, Jingchuan believes that the introduction of social stock funds to participate in infrastructure projects can not only solve some capital problems, but also an important step of market-oriented reform. This has enabled some infrastructure projects that have been shelved due to funding problems to be smoothly promoted, which has a certain pulling effect on the domestic macro-economy. Jingchuan said.
In fact, according to Wang Hongyings prediction, in the next three to five years, such products are likely to provide about 6 trillion yuan of financial support for Chinas infrastructure construction, so as to further improve the speed and efficiency of Chinas infrastructure construction, and make reserves for Chinas future economic internal circulation.
In Jingchuans view, in a sense, it is also a major national initiative to prevent risks, deleverage, stabilize investment, and make up for weaknesses. It is conducive to actively supporting the implementation of major national strategies, deepening the structural reform of the financial supply side, strengthening the ability of the capital market to serve the real economy, further innovating the investment and financing mechanism, effectively activating the existing assets, and promoting the high quality of infrastructure Quantity development.
As for the impact of REITs on commodities, Jingchuan believes that it mainly depends on whether it can effectively guide the stock funds into the field of infrastructure construction and whether it can accelerate the implementation of infrastructure projects. If we can effectively solve the capital problem of infrastructure investment and accelerate the implementation of infrastructure projects, it will effectively stimulate the downstream demand of nonferrous and black commodities and support the prices of the above commodities.
Specifically, copper, aluminum and other metals will obviously benefit from the accelerated promotion of projects in the field of electric power investment; steel and its upstream varieties will benefit more from the implementation of transportation projects; while projects such as residential renovation will not only benefit steel products, but also boost the demand for downstream products such as glass and PVC. On the whole, the promotion of REITs products on infrastructure projects will have an overall beneficial impact on industrial products. He said.