Research On Financial Risk Control Of Abs In Long-term Apartment Enterprises In China

With the downturn of the market of real estate in China,the demand for house-purchase has been partially transferred into the residential rental market.Moreover,China has introduced many policies to activate the house rental market in recent years.As a result,many real estate enterprises and house rental enterprises cast their attention to the market of the long-term rental apartments.There are a lot of advantages for long-term rental apartments,e.g.,brand marketing,delicacy management,standardized post-sales service.Nevertheless,they suffer from a long period for payback,a large amount of financing cost,and a narrow field of financing sources.Fortunately,the enterprises have found asset-backed security(ABS)to be of great potential in overcoming the challenges.In this paper,we conduct an extensive survey on Ziru,an enterprise of long-term rental apartments,in terms of their ABS financing model.Moreover,we identify several financial risks,analyze the possible causes behind,quantify the potential damage and loss,and propose several effective measures for risk control.The Information Asymmetry Theory,the Credit Enhancement Theory,Bankruptcy Isolation Theory and Data Normalization Theory serve as the basis and support our case study substantially.As a conclusion,it requires a high quality of the primary assets for the long-term rental apartments with respect to ABS financing model.Besides,the credit checking for the tenants,the high occupancy of the apartments,and the health of the financial chain are critical to long-term rental apartments.