As a fund, REITs have the advantages of risk diversification and professional management. Through the combination of real estate projects and businesses in different regions and types, REITs can effectively reduce investment risks while maintaining a certain level of income. In addition, REITs usually hire real estate professionals for investment management and formulate the best strategy, which effectively ensures the profitability of the fund.
1. Establish and improve relevant supporting systems.
The primary task of developing real estate investment trust funds is to improve the system and legal environment for the operation of real estate investment trust funds. Principal-agent risk: on the one hand, it brings the benefits of specialized division of labor to the client; On the other hand, it also brings the agency problem and damages the interests of the client. To solve the problem of principal-agent risk, the following principles can be adopted: first, the principal must grant the agent rights in order to maximize his own interests, and the rights granted to the agent must be moderate and reserved; Second, the client must supervise and restrain the authorized agent in order to maximize his own interests; Third, in order to maximize customers' own interests, authorized agents must be encouraged. On the basis of the above three principles, establish incentive, supervision and restraint mechanisms.
In addition, we can learn from American experience and introduce the independent director system. That is, every REITs fund must employ independent directors. Obviously, independent directors work for the fund rather than the investment company. Independent directors decide the interests of the fund, not the interests of the investment company. This can better ensure that independent directors serve the interests of trust beneficiaries, not just the interests of company shareholders. Only through strict institutional constraints, relevant supporting reforms, constantly standardizing the operation process of REITs and the governance structure of REITs institutions, establishing supervision and incentive mechanisms, perfecting the information disclosure system, and ensuring the transparency of REITs operation, can we create a good environment for venture capital.
2. Establish and improve the governance structure of real estate trust and investment funds.
To develop real estate investment trust funds, the first task is to improve the operating system and legal environment of real estate investment trust funds. On the one hand, the principal theory brings the benefits of specialized division of labor to the principal, on the other hand, the industry brings agency problems and harms the interests of the principal. The client may be difficult to supervise effectively due to lack of professional knowledge, so it is necessary to set up independent directors to make judgments from a neutral perspective. This can seek more benefits for the trust beneficiaries (insurance companies).
3, as soon as possible, the corresponding insurance investment in real estate legal documents.
In 2006, the China Insurance Regulatory Commission issued the Measures for the Pilot Management of Indirect Investment of Insurance Funds in Infrastructure Projects, which played an important role in improving the level of insurance funds utilization and promoting economic construction. However, in view of the high risk of the real estate industry, the insurance industry has been in a cautious exploration stage for insurance investment in real estate. With the development of insurance company's governance structure and the improvement of risk management and control ability, insurance investment in real estate is gradually put on the agenda. In 2008, General Office of the State Council 126 also gave guidance and encouragement to related issues. For the formulation of real estate legal documents, we can refer to the Measures for the Administration of Insurance Funds' Indirect Investment in Infrastructure Projects and formulate the Measures for the Administration of Insurance Funds' Investment in Real Estate. Introduce independent supervisors, make specific provisions on the rights and obligations of the clients, trustees, beneficiaries and custodians involved in the investment plan, determine the investment share and investment period in the speculative plan, and list the investment scope in detail. At the same time, strengthen information disclosure, risk management and supervision and management to minimize the risk of insurance investment in real estate.
4. Professional compound talents training
REITs are basically equity products, and the yield of such products is not fixed, which basically depends on the management team ability of REITs. Its operation is complex and professional, which requires a talent team who not only knows the real estate professional knowledge, but also grasps the investment banking business and related laws and regulations, realizes the professional management of REITs, formulates the optimal investment strategy, reduces risks and improves returns.
5. Establish a supervision system
The openness and transparency of information is conducive to protecting the interests of investors and plays a decisive role in their decision-making. The regulatory agencies of China Banking Regulatory Commission, China Securities Regulatory Commission or China Insurance Regulatory Commission have clearly defined the regulatory tasks of REITs, avoiding regulatory dislocation, and effectively supervising and increasing the safety of insurance funds investing in REITs.