Research On The Application Of The Financing Model Of YQ Public Rental Housing REITs

In the report of the 20 th National Congress of the Communist Party of China,it was clearly stated that "a housing system with multiple sources of supply,multi-channel guarantee,and simultaneous rental and purchase needs should be established to ensure that all people have access to housing and a balance between work and housing." The country called on the government to accelerate the construction of public rental housing projects.However,with the increasing demand for public rental housing construction,public rental housing projects led by the government generally face financial pressure and financing difficulties.Although previous studies have attempted to introduce the PPP(government social capital cooperation)model into private capital,the low yield and long investment payback period of public rental housing have led to a cold reception in the market.Therefore,there is an urgent need to innovate the financing model of public rental housing.Recently,relevant research has focused on integrating REITs(Real Estate Investment Trust Fund)model for public rental housing financing,and China has begun to try public rental housing projects in the field of REITs,and successively listed CICC Xiamen Anju REIT,Red Earth Innovation Shenzhen Renju REIT and Huaxia Beijing Guarantee Housing REIT.However,there are also two shortcomings: on the one hand,due to the fact that these three REITs are all piloted in first tier cities and are geographically concentrated in southeastern coastal cities,the sample size is limited and there is a lack of research on REITs in other types of cities.There are still doubts about the universality of using the REITs model for financing public rental housing projects.On the other hand,the existing REITs are being piloted in more economically developed regions,and the application prospects of the same benefit model in other cities are not yet known.Therefore,it is still necessary to actively promote the expansion of the pilot scope of the REITs model for public rental housing projects,and try to cover cities with different regions,cultures,and economic conditions in China as much as possible in the selection of pilot projects.Taking the YQ public rental housing project in a non first tier city as an example,this paper first obtains the basic operating conditions and construction investment costs of the project,calculates the internal rate of return of the project through the NPV(net present value)method,determines that the YQ public rental housing project meets the return requirements of REITs listing,designs the organizational structure and basic operating mode of the REITs model of the YQ public rental housing project,and analyzes the relevant returns of the project after adopting the REITs model,Under normal circumstances,the benefits of REITs include project operating income and capital appreciation income.However,due to the fact that the income model is limited to discussing whether the YQ public rental housing project can use the REITs model and the expected returns of this model,it is difficult to estimate the capital appreciation benefits.Therefore,after discussing the operating income of the YQ public rental housing project in this article,appropriate valuation methods are selected based on the project’s own characteristics,and the final valuation of the project is determined by the operating cash flow FFO(operating cash flow)in the income method.When using the FFO discount method,Simulate the market situation distribution of the main segmented variables in the project operation process,such as operating revenue and cost expenditures,and determine the simulation distribution of each variable through Monte Carlo simulation.Predict and improve the FFO of each phase of the REITs in the YQ public rental housing project.Perform sensitivity analysis on the relevant variables that affect FFO.On the one hand,discuss the corresponding operational sensitivity of each variable separately,On the other hand,when discussing the value of the entire project itself,there is a nearly 38% probability that its discounted valuation will be lower than the construction cost,meaning that the project cost will not be recovered.However,the median and average returns were 152.729 million yuan and 181.8614 million yuan respectively,both exceeding the investment cost of the project.And based on the data simulated by Monte Carlo,propose operational risks and response suggestions for the project,including cultivating relevant talents,reducing project revenue risks,clarifying relevant tax laws,establishing risk warning,establishing reserve system,and using floating management fees to improve operational efficiency.The findings of this study indicate that for public rental housing projects in non first tier cities,the REITs model can still be used for financing.In terms of operating income,on the one hand,the average income and intermediate income both exceed the investment cost,and the income is relatively stable,which is attractive to the capital market,and there is also the capital appreciation income of the project itself.On the other hand,it is suggested that the local government can also provide feasible income subsidies based on the operating conditions of each year during the operating period.That is,in years with poor operating conditions,subsidies can be directly provided to ensure that the operating income of that year meets the basic cost discount,ensuring that the project itself does not suffer losses.Overall,the use of REITs financing models in public rental housing projects has a certain degree of universality.