Research On Financing Risk Assessment Of Infrastructure REITs

The risk of financing models is the main factor determining the success or failure of infrastructure financing.Reasonable and accurate prediction of risks in advance and targeted control and management of risk factors can effectively reduce risks and avoid losses.Real estate trust funds(REITs)are currently a key financing model being piloted in China.REITs raise funds from the general public,have a large scale,can revitalize existing infrastructure projects,reduce corporate liabilities,and meet the financing needs of real estate asset owners.In 2021,which was a new starting point for China to vigorously develop the financing model of REITs,and the development of REITs ushered in a new takeoff.However,REITs are a new type of financing tool that lacks relevant experience.In addition,the domestic economic environment is significantly different from that of countries such as the United States,Europe,and Japan.Foreign REITs projects have limited reference value and pose many risks,especially for public infrastructure projects that involve national economic development and the foundation of people’s daily lives.Therefore,it is necessary to evaluate and study the risks of using REITs financing models for infrastructure.Although existing risk assessment methods are helpful for the study of financing risks in infrastructure REITs,they lack analysis of the complex logical relationships between various risk factors,making it difficult to address the breadth,complexity,and variability of financing risks in infrastructure REITs.This article is based on an investigation of the current development status of domestic REITs and research and analysis of the theory and practice of domestic REITs.The entropy weight method CIM and system dynamics analysis methods are used to identify the risks of infrastructure REITs financing models,and quantitatively analyze and evaluate the impact on financing risks.The main content of this article is as follows:(1)Conduct financing risk analysis of infrastructure REITs.This mainly includes analyzing the financing risks of infrastructure REITs,establishing a relationship system between financing elements of infrastructure REITs,and identifying the risk factors of infrastructure REITs financing models,providing support for building a system dynamics model.Firstly,based on literature research,a risk element system for infrastructure REITs financing is established.Then,risk factors are preliminarily identified and analyzed through expert interviews.The entropy weight method-CIM is used to evaluate the risk factors processed through expert interviews.(2)Build a dynamic model for the financing risk assessment system of infrastructure REITs.Firstly,a system is established based on financing elements and key indicators for risk identification,clarifying the research objectives and system boundaries of system dynamics.This involves constructing an analysis system for "infrastructure REITs financing risks",simulating the impact of various risk factors on overall risk,and using VENSIM software to construct a causal loop diagram between each risk element to qualitatively describe the logical relationship between infrastructure REITs financing risk factors.Based on the relationships between various elements,parameter variables are determined,and the causal loop diagram is transformed into a stock flow diagram.At the same time,the calculation methods of each factor in the stock flow diagram are determined based on relevant literature analysis and data investigation,and the establishment of a system dynamics model is completed to achieve quantitative analysis of risk factors.(3)Using a system dynamics model to simulate and analyze actual projects,key risk factors such as market demand,REITs returns,and interest rates were identified by controlling various parameter variables and observing the degree of impact of different factors on risk.(4)Finally,based on various key risk factors and national conditions,this article proposes suggestions that are in line with the current situation: building a legal and regulatory system for REITs with Chinese characteristics,promoting REITs financing,cultivating corresponding talents suitable for domestic characteristics,increasing financial subsidies for REITs financing,and establishing a sound regulatory system.