According to the relevant speech, it has not been reviewed by myself.
The concept of real estate investment trusts (REITs) has entered China for many years, but it is still a new thing for many people.
Since the release of the infrastructure REITs pilot document in April, 2020, relevant policies have been widely concerned and the pilot work has been actively carried out. We know that due to the "new thing" of infrastructure REITs, some market institutions and investors have not understood it deeply and accurately enough, which is not conducive to the smooth progress of this work to some extent.
Infrastructure REITs are an important measure to revitalize existing assets and promote a virtuous circle of investment. To build and develop the infrastructure REITs market, we must comprehensively, objectively and accurately understand the significance of infrastructure REITs.
First of all, it is conducive to providing effective equity financing tools for infrastructure projects.
"Financing is difficult and expensive" is a common problem facing the real economy. Specific to the infrastructure sector, the most difficult thing is to raise funds. Generally speaking, the investment scale of infrastructure projects is relatively large, the return is relatively low, and the demand for funds is very large. However, the financing structure formed in China for a long time is mainly indirect financing, supplemented by direct financing. Direct financing only accounts for more than 10% of the total social financing, and direct financing also includes a considerable part of bond financing. Bond financing is actually a kind of debt financing, and the real equity financing accounts for a very low proportion in the total social financing in China. In this way, on the one hand, infrastructure projects need a lot of equity funds as capital, on the other hand, they are faced with a single-digit financing structure. This brings a big problem to the financing of infrastructure projects.
Previously, all parties have tried to solve the problem of fund-raising through various means. However, with the implementation of the new asset management regulations, the once popular methods such as "clearing stocks and paying debts" are no longer operational. Since the beginning of this year, affected by the epidemic, many places have been under great financial pressure, poor corporate efficiency, and the financing of infrastructure projects has become more difficult. REITs is an equity financing tool. At present, more than 90% of the global REITs funds are equity-based, and our implementation of infrastructure REITs clearly requires us to adhere to the characteristics of equity-based. Therefore, REITs is a kind of equity financing tool, which revitalizes the existing infrastructure assets and helps to solve the financing problem of infrastructure projects.
After long-term investment and construction, China has formed a large number of high-quality assets in infrastructure fields such as transportation and energy, ecological environment protection, agriculture, forestry, water conservancy, education and health, urban construction, warehousing and logistics, and many of these projects are suitable for REITs. The key to REITs is that the underlying assets are mature and have stable cash flow, and many infrastructure projects fully meet this requirement. For example, sewage and garbage disposal projects, municipal infrastructure such as water supply, heat supply and gas supply, and transportation facilities such as expressways. Another example is the high-speed rail. In the past, people always thought that high-speed rail was unprofitable and its benefits were not good, but in fact, the situation has changed a lot in recent years. The most famous Beijing-Shanghai high-speed rail has been listed, and other high-speed rail projects in economically developed and densely populated areas are also operating well. Many infrastructures also have a major feature-natural monopoly, such as water supply, heat supply and gas supply infrastructure, whose demand is rigid, the income is more stable than many commercial real estate projects, and it is more suitable for issuing REITs. Commercial real estate projects, whether office buildings or shopping malls, are facing greater market risks. With the change of local economic development situation, population mobility and the rise of new business office models, there are more uncertainties in its profitability. Therefore, from the perspective of the maturity of basic assets and the stability of cash flow, many infrastructure assets are actually more qualified to issue REITs.
Therefore, we should have enough confidence in this model, issue REITs products with high-quality infrastructure assets, revitalize the stock, and use the recovered funds as capital investment to build new short-board projects. With the introduction of the pilot document, people from all walks of life have gradually deepened their understanding of infrastructure assets, and now many people think that the related assets that can be operated through REITs in the infrastructure field are very considerable.
Second, it is conducive to improving the reinvestment ability of infrastructure enterprises.
Enterprises that focus on infrastructure construction and operation are currently facing a * * * problem: they have invested in a large number of projects, with large total assets and high asset-liability ratio, which limits their reinvestment ability and further development. Issuing infrastructure REITs will help infrastructure enterprises solve this problem.
The first is to enhance the refinancing ability of enterprises. The original owner of the project obtains equivalent cash assets by issuing REITs products, which can help enterprises really improve their balance sheets and reduce leverage ratio, thus freeing up financing space and enhancing their refinancing ability without providing credit enhancement measures such as making up the difference, covering the bottom or repurchasing. The debt ratio of an enterprise directly determines its financing ability. Enterprises with a debt ratio of 80% will definitely have different refinancing ability from those with a debt ratio of 60%. Many infrastructure enterprises have high debt ratios, which are close to or even reach the ceiling, and the space for refinancing is very limited. By issuing REITs, on the one hand, we can obtain equity funds, on the other hand, we can reduce leverage and improve the refinancing ability of infrastructure enterprises.
The second is to improve the ability of enterprises to resist risks. The issuance of REITs is equivalent to the early realization of future earnings. For investors of REITs, buying REITs products is to obtain relatively stable investment income, while for the original holders of infrastructure projects, issuing REITs is actually to recover future cash flow in advance, which can prevent future market, operation and other risks to a certain extent. After issuing REITs, the original holders transferred the ownership and income of the underlying assets to Public Offering of Fund, and the corresponding risks were also transferred to Public Offering of Fund. Although the original equity holders or their related parties under the same control are required to hold no less than 20% of the shares of public offering funds during the lock-up period, compared with before the issuance of REITs, the proportion of equity shares held is obviously reduced, and the risks assumed are also reduced. At the same time, the self-sustaining part can also be publicly transferred after the lock-up period, and the liquidity is obviously enhanced, which also helps to improve the enterprise's ability to resist risks.
The third is to reduce the daily cash flow pressure. Cash flow is very important to enterprises, just like the relationship between blood and body. A person's blood supply is insufficient, and there must be something wrong with his body. A few years ago, many enterprises participated in PPP projects, and some enterprises had operational problems due to tight cash flow. These enterprises have invested in many infrastructure projects through PPP mode, and they need a lot of debt to support the project construction, and then there is great pressure to repay the principal and interest. Once the policy or market changes, the cash flow is too tight or even the capital chain breaks, enterprises will immediately face a crisis of life and death. Issuing REITs can reduce liabilities, greatly reduce the cash flow pressure of enterprises, and prevent the problem of insufficient liquidity of enterprises, which is conducive to the long-term stable development of enterprises.
Third, it is conducive to attracting all kinds of social capital to participate in infrastructure construction.
The first is to enhance the enthusiasm of private capital participation. The state has issued many documents, emphasizing the need to remove relevant threshold restrictions and allow private enterprises to participate in infrastructure construction extensively. But in practice, private enterprises still face many problems and difficulties in participating in infrastructure projects.
On the one hand, the preliminary work of infrastructure projects is complicated, involving many procedures and departments, and the land acquisition and demolition work is also very difficult. Private enterprises are often unable to do so, and it is difficult to promote them, which will undoubtedly limit the enthusiasm and possibility of private capital participating in infrastructure construction. Compared with investing in new projects, private enterprises are more suitable to participate in mature stock projects through infrastructure REITs, both as investors and as operation managers. In this way, you don't need to undertake very complicated preliminary work of project construction, you can cut into the project in a more appropriate way at a more certain time, and get more stable investment income, which greatly reduces the difficulty of participation and investment risk.
On the other hand, issuing infrastructure REITs is a complete chain of "investment-operation-exit-reinvestment" in the infrastructure field, forming a closed loop of investment and financing. At present, private enterprises participating in infrastructure investment generally lack smooth investment exit channels, which leads to high leverage operation and insufficient willingness and ability to reinvest. Just as the launch of Growth Enterprise Market and science and technology innovation board promotes social capital to participate in venture capital, infrastructure REITs provide a standardized exit channel for infrastructure investment, which will greatly enhance the liquidity and market valuation of infrastructure assets and will be very attractive to private investment. Therefore, infrastructure REITs will greatly enhance the willingness and ability of private enterprises to invest in infrastructure.
Second, better attract insurance, social security, wealth management funds and Public Offering of Fund to participate in infrastructure investment. To attract social funds to participate in infrastructure investment, we should not only have a welcome attitude, but also have specific methods and operating rules. If the related problems are not properly solved, various social funds may be powerless and unable to participate.
Take insurance funds as an example. The investment of insurance funds can usually be divided into two types: equity investment and debt investment. Insurance funds are very cautious and have a high degree of aversion to risks. Fixed-income projects have strong credit enhancement measures, which can form a certain guarantee for their investment recovery, so insurance funds are more enthusiastic to participate; However, if insurance funds are allowed to invest in new projects in the form of equity, due to the high risk, the return on investment of insurance funds is correspondingly high, and the return on investment of infrastructure projects is difficult to meet the requirements of insurance funds for return on equity investment. In addition, the liquidity is low, which is really unattractive to insurance funds. REITs, on the other hand, are between stocks and bonds, with moderate risks, high returns and good liquidity, and are a standardized financial product. The issuance of REITs can solve the income and liquidity problems of insurance funds participating in infrastructure investment, and then attract more insurance funds to enter the infrastructure field.
Another example is bank financing. In the past few years, we can enter the field of infrastructure investment through fund pool, maturity mismatch and real debt. However, after the new asset management regulations came out, the investment of wealth management funds in non-standard products was greatly restricted. The issuance of standardized products such as REITs can just solve the channel problem of bank wealth management investment infrastructure, which fully meets the requirements of the new asset management regulations.
Look at the public investors. According to the working guidelines issued by China Securities Regulatory Commission, a part of the share of infrastructure REITs must be subscribed by public investors. Because many infrastructure investment projects have large scale, long payback period and very high investment threshold, it is difficult for ordinary people to participate directly. With the introduction of REITs, ordinary people can buy shares in REITs like stocks, participate in infrastructure investment, and share the investment income, which is conducive to promoting the broad masses of people to enjoy the fruits of reform and development and implementing the new development concept of innovation, coordination, green, openness and * * *.
Fourth, it is conducive to improving the efficiency of infrastructure operation and management.
The inefficient operation and management of infrastructure and extensive operation and management methods are common problems in the field of infrastructure, but it also means that there is more room for improvement in the future. Infrastructure REITs is one of the important means to improve the efficiency of operation and management.
From the internal motivation, REITs purchase basic assets by publicly raising investors' funds, which are managed by fund managers, which puts higher demands on fund managers. Investors' income mainly comes from infrastructure assets. How to manage infrastructure assets well and create higher returns for investors is a key issue for fund managers. If the fund manager's management efficiency is not high and the income is low, it will affect the confidence of investors, and there is great doubt whether similar products can be recognized by the market in the future. Under such pressure, if the fund manager wants to gain a good market reputation and make the fund develop continuously for a long time, he must do everything possible to manage the infrastructure assets, strive to improve the project income and asset value, and ensure the reasonable income of investors.
From the external pressure, issuing infrastructure REITs is equivalent to the IPO of assets. Information disclosure must be standardized, complete, open and transparent, and investors will compare it with similar assets, such as sewage treatment plants and highways. Why do other companies and other REITs of the same type perform better and have higher returns? What does the market think? Can the fund manager reasonably explain? The degree of investors' recognition of REITs will be reflected in the price of REITs. It is clear at a glance which assets operate better and can be recognized by the market. This can form greater external supervision pressure on the operation and management of infrastructure, which is conducive to promoting them to establish a refined and efficient operation and management mechanism and improve the efficiency of operation and management.
Fifth, it is conducive to implementing a series of important decision-making arrangements of the central government, filling the shortcomings of infrastructure and promoting the implementation of major national strategies.
China's economy has shifted from a high-speed growth stage to a high-quality development stage, and there will still be a great demand for investment in infrastructure for a long time to come. First, in 20 19, the urbanization rate of permanent residents in China was 60.6%, which is still far from the level of over 80% in developed countries, and the investment potential for urbanization construction is huge. Second, the shortcomings of ecological environment, people's livelihood, water conservancy, energy and other industries are still outstanding, and the infrastructure in rural areas is still backward. Investment in the short-board field needs to be maintained. Third, the implementation of major national strategies such as Beijing-Tianjin-Hebei, xiong'an new area, the Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, the Yangtze River Economic Belt and Hainan has put forward new and higher requirements for infrastructure construction. Fourth, some existing infrastructures have problems such as aging equipment and insufficient capacity, which makes it difficult to meet the emerging needs of society and support economic transformation and upgrading, and there is a large room for transformation and upgrading. These all need a lot of financial support. With the increasing pressure of local finance, the benefits of some enterprises are not ideal, and it is more difficult to raise funds. If we can make good use of REITs, we can effectively support the implementation of major strategies.
Since 20 18, many documents, such as Guiding Opinions of the Central Committee of the State Council on Supporting the Comprehensive Deepening of Reform and Opening-up in xiong'an new area, Hebei Province, Overall Plan for the Construction of Hainan Free Trade Port, and Opinions of the State Council on Promoting the Innovation and Upgrading of National Economic and Technological Development Zones to Create a New Highland for Reform and Opening-up, have clearly stated that REITs should play an active role and promote the implementation of major national strategic policies. Making good use of REITs, a financial tool, has an important role in promoting the implementation of major national strategies in three aspects: first, it can turn stocks into cash and assets deposited on books into realistic liquidity; Second, it is conducive to providing standardized and standardized exit channels for social capital, thus improving the enthusiasm of social capital to participate in new investment projects; Third, it also provides new ideas for the construction of new infrastructure projects. When investing in new projects in the future, you can prepare for the future issuance of REITs in advance and lay a good foundation.
Sixth, it is conducive to promoting the construction of new infrastructure projects.
With the development of new technologies, it is increasingly urgent to invest in new infrastructure construction such as 5G, artificial intelligence, industrial Internet, Internet of Things and data center. Under the background of acceleration and rapid layout, there is a great demand for new infrastructure construction financing, but there are still some obstacles in traditional financial support. By promoting infrastructure REITs, it is also conducive to breaking the barriers of financial support for new infrastructure and fully stimulating the vitality of market participation. Take the data center as an example, the demand of data center will increase exponentially, and the investment in data center construction is very high. It is a very mature model to issue REITs by using data centers abroad. If this model is also promoted in China, the rolling cycle of data center investment and construction can be realized-investment and construction, return from external leasing, REITs withdrawal and rolling reinvestment, thus forming a benign investment cycle in the field of new infrastructure.
To sum up, infrastructure REITs are a major innovation in infrastructure investment and financing mechanism, an important starting point for promoting the tasks of "six stabilities" and "six guarantees" at present, and a long-term measure to strengthen financial support for the real economy and promote high-quality economic development. Investment management should not only pay attention to increment, but also pay attention to stock. It is of great significance to make good use of the tool of infrastructure REITs and combine the revitalized stock with new investment.
Infrastructure REITs is still a new thing in China. We should be full of confidence, but we should not rush for success. We should advance step by step and steadily, sum up the pilot experience in time, actively solve related problems, and promote the long-term healthy development of infrastructure REITs market.