Research On The Motivation,path And Effect Of Issuing REITs In Housing Rental Industry

The "14th Five-Year Plan" clearly proposed to establish a "rent-purchase" system and accelerated the healthy development of the housing rental market.The report of the 20th Party Congress also re-emphasized the need to accelerate the establishment of a housing system with multiple supply entities,multi-channel protection,and rent-to-own.As China’s real estate industry enters the era of stock,the housing leasing industry has broad development prospects,but still faces the problems of "difficult financing" and "expensive financing".Real Estate Trust Investment Funds(REITs),as an important bridge between the financial industry and the real estate industry,are of great significance in revitalizing the stock assets of the real estate industry.With the listing of the first batch of public REITs in China in June 2021,the REITs issued in China have also crossed over from not standardized REITs to standardized and publicly offered REITs,providing more innovative financing paths for the housing leasing industry.This paper explores the motives,paths and effects of issuing REITs and public REITs in the housing leasing industry to provide experience of new financing methods for the housing leasing industry and to provide reference for the subsequent issuance of public REITs by enterprises in the housing leasing industry.Based on the theories of principal-agent theory,bankruptcy isolation theory and credit enhancement theory,this paper combines domestic and international studies on REITs and public REITs,and selects Shenzhen Talents Housing Group as the research object through a case study method.This paper analyzes the "No Standardized REIT " products issued by Shenzhen Talents Housing Group in 2018 and the publicly offered REITs issued in 2022,and explores in detail the motivation,path and effect of their issuance.In 2018,Shenzhen Talents Housing Group successfully issued the first " No Standardized REIT "product for talent housing leasing in China,and then listed one of the first publicly offered REITs for subsidized housing leasing on the Shenzhen Stock Exchange in 2022.The first public REITs for talent housing leasing were listed on the Shenzhen Stock Exchange in 2022.Therefore,Shenzhen Talent Housing Group is a pioneer in the industry in issuing " No Standardized REIT " products and publicly offered REITs products,which is typical and provides certain reference significance for other enterprises in the housing leasing industry.Through the case study,this paper draws the following conclusions:Firstly,the issuance of No Standardized REIT and publicly offered REITs is influenced by the policy,the industry and the enterprises’ own needs.The introduction of policies provides legal protection and guidance for the issuance of No Standardized REIT and publicly offered REITs;the financing needs of the housing leasing industry and the limitations of traditional financing methods require the industry to find innovative financing methods;the financial situation and development needs of the enterprises themselves are also pushing the enterprises to issue No Standardized REIT and publicly offered REITs products.Secondly,the differences in the issuance paths of No Standardized REIT and publicly offered REITs have resulted in differences in the attributes of the two types of products,which in turn can meet the needs of different investors.No Standardized REITs are more debt-based in nature and can meet the needs of investors with higher requirements for cash flow stability,while publicly offered REITs are more equity-based in nature and can meet the needs of investors with higher uncertainty and risk tolerance.Thirdly,the transaction structures of No Standardized REITs and publicly offered REITs are still complex and the participating parties face higher tax liabilities.The underlying assets,SPVs,project companies,private or public funds,and asset-specific plans of No Standardized REITs and publicly offered REITs have complex transaction structures.In addition,the tax burden of the participants in the establishment and operation stages of REITs remains heavy,while the tax burden of the participants in the operation stage of public REITs is also heavy.Lastly,the issuance effect of No Standardized REITs and publicly offered REITs needs to be further improved.The performance of REITs-like products in improving the financial performance of the original equity holders and their own operating results is not satisfactory,while the market performance and operating results of publicly offered REITs are not as good as those of publicly offered REITs on the same stock exchange during the same period.This study also draws the following insights:firstly,the government needs to introduce preferential tax policies and legal systems to continuously support the development of REITs products;secondly,enterprises should actively use No Standardized REIT and publicly offered REITs to raise funds and continuously provide high-quality assets to provide more options for the subsequent expansion of REITs products;third,investors should strengthen their own learning and continuously pay attention to Thirdly,investors should strengthen their own learning,pay continuous attention to the information of REITs products,and enhance their own knowledge and understanding of the products.On the one hand,it helps to reflect on and improve the issued No Standardized REITs products or publicly offered REITs products,and on the other hand,it provides reference experience for the subsequent issuance of No Standardized REITs products or publicly offered REITs products in the housing leasing industry.