Case Study On REITs Financing Of China Merchants Shekou Industrial Park

As an important carrier of China’s regional economic development,industrial parks are one of the important forces to promote economic development.The 14 th Five-year Plan of China explicitly mentions the need to promote the d evelopment of industrial parks.As the market of real estate industry becomes increasingly saturated,real estate enterprises have arranged the business of industrial parks.However,it is difficult to finance the construction of industrial parks due to th e large scale of investment in infrastructure construction,high operation and maintenance costs and the unsmooth exit channels of capital.As an important tool for financing through real estate trust fund,REITs can revitalize the stock assets,integrate funds for real estate enterprises engaged in industrial park construction,and innovate investment and financing mechanisms.However,REITs started late in China,and the issuance of public infrastructure REITs is still relatively few.There are also many problems to be solved in the specific implementation,such as complex scheme design,unstable cash flow and low rate of return,which will affect its issuance and subsequent risk control.In-depth exploration of product design and financing effects of publ ic infrastructure REITs and summary of scientific and effective design schemes are conducive to promoting this financing mode in the real estate industry,relieving the financial pressure of the industry and helping the development of public infrastructure REITs in China.This paper selects "China Merchants Shekou Industrial Park REITs",the first batch of public infrastructure REITs issued by China Merchants Shekou For research.First of all,the effect of financing is evaluated by means of event study met hod,financial index method and strategic value analysis.The study finds that the issuance of industrial park REITs achieves positive market reaction,effectively alleviates the financing dilemma of issuers,improves financial indicators and revitalizes s tock assets.Secondly,based on the analysis of the basic assets,transaction structure,transaction process and related risks in the product design scheme of the industrial park’S REITs,the advantages of its product design are found: the underlying basic assets of the industrial park’s REITs are of high quality,which can provide stable cash flow for its long-term development;The trading structure of dual SPV and stock bond is beneficial to realize risk isolation and income tax deduction.The professionalism of the REITs management team effectively reduces the operational risk of the project.But on the other hand,the industrial park’s REITs products also have some limitations: the subject of multiple trading links has repeated taxation;Long closed peri od and low liquidity;The transaction process is too complex and the asset transfer policy is not clear;Incomplete information disclosure leads to lagging market response.Finally,in view of the above problems puts forward the corresponding countermeasur es and Suggestions: innovation public offering REITs product structure design to avoid double pay taxes,to implement REITs market-making system in order to improve the secondary market liquidity,establish REITs related laws and regulations,improve the assets transfer policy,improve the REITs information disclosure mechanism to reduce the information asymmetry.Research conclusion of this paper is helpful to perfect our infrastructure public offering product design and application of REITs,for real esta te enterprises to learn from the industrial park business financing model development,broaden the financing channels,implementing light capitalization operation and reduce the cost of financing to provide experience for reference,as well as to promote t he sustainable development of the industrial park construction in our country.