Relevant Research On Reits In The Operation Of Public Rental Housing In China

In recent years, the housing safeguard has become a significant problem about people’s livelihood and development, which is not only a hot spot but also research difficulty paid much attention. After being put forward in the Government Work Report for the first time by Premier Wen Jiabao, in2009, constructing public rental housing has become a strategic measure to perfect our country’s affordable housing system and to guide the rational and healthy development of the real estate market. Built according to the required standard by investors (government and non-governmental organizations), public rental housing is a kind of affordable housing supplied to specific populations with a lower rent than market rent. Public rental house is the most important section of the affordable housing system during the twelfth five-year period, which is regarded as an efficient way to solve the housing problem of "the sandwiched class".In the practice of some major cities, how to guarantee the sustainable public rental housing funding, and how to ensure public rental housing managed and operated efficiently are the main problems. For financing, although some cities are actively exploring market financing, such as Shanghai turns to insurance capital, Chongqing introduces fund, these are all debt financing. As is known to all, debt financing not only needs to pay interest periodically, but also requires repaying the principal. Therefore, public rental housing project must be designed with a reasonable debt servicing way. Therefore, Chongqing and Qingdao plan to sell some public rental houses in order to get back the investment fund. Considering that public rental housing, which enjoys the preferential government policy, is a quasi public item, selling it to a small fraction, obviously unfair to the social populace, contrary to its social security properties, and also goes against public rental housing’s sustainable development. For management and operation, these are some specialized government agencies set for public rental housing managing. It is certain that this model can ensure public rental housing be of public property. However, due to the large number of guarantee objectives, the difficulty in daily operation and maintenance will be very huge. It needs large amount of money and human input. At present, with the shortage of housing security agency personnel, the further increase of the workload is a great challenge for government efficiency.In view of the above analysis, this paper puts forward that we can set up Real Estate Investment Trusts (REITs), at the appropriate time, to participate in public rental housing operation. On the one hand, government and developers of public rental housing can recovery construction funds through the asset securitization, and make it available for public rental housing rolling development. Thus form a kind of endogenous financing mechanism. On the other hand, REITs operating institutions could supply standardized, professional management to the public rental housing. This could not only improve public rental housing management and service quality, but also reduce the pressure on government management, effectively control the management costs, and raise the utilizing efficiency of resources.The paper analyzes the feasibility of REITs participating in public rental housing’s operation in several aspects, such as government policy, financial market and project profitability. According to the present development status and the long term goal of public rental housing, with REITs experience from foreign countries, the paper puts forward the suitable mode for public rental housing REITs. With relevant data and the necessary qualitative and quantitative hypotheses, the paper computes the internal rate of return (IRR) of REITs operating public rental housing project. Taking the rental revenue of the commercial property combined public rental housing into account is the main innovation point. Finally, the paper proposes some measures to control the risks public rental housing REITs may be facing. Also give some relevant recommendations in order to promote the healthy and sustainable development of the public rental housing REITs in our country.