Internationally speaking, real estate investment trusts (REITs) are a kind of trust funds that collect the funds of a specific majority of investors by issuing income certificates, are managed by specialized investment institutions, and distribute the comprehensive investment income to investors in proportion. Different from domestic pure private trust products, REITs in the international sense are equivalent to funds in nature, and a few are private placements, but most of them are public offerings. REITs can operate in a closed mode or be listed and traded, similar to open-end funds and closed-end funds in China.
Development Status: The survey data shows that the proportion of real estate loans in the newly added assets of financial institutions is rising rapidly, and about 70% of the real estate development funds come from the support of bank loans, which has become an industry highly dependent on the banking industry. The state has introduced a series of macro-control, and a series of policy credit tightening policies of banks have exposed the disadvantages of single financing channel for real estate. Therefore, building diversified, efficient and risk-dispersed real estate finance has become an urgent problem to be solved in China's real estate development. China's real estate investment trust is precisely because the state has strengthened the management of credit funds of real estate companies. Under the pressure of policy, real estate companies cooperate with trust and investment companies to ensure the capital chain, thus promoting the development of real estate investment trusts.
From the organizational form, China's real estate investment trusts are all contractual, that is, trust investment companies initiate trust plans, and then investors sign trust contracts with trust companies. Each contract has a minimum subscription amount (according to regulations, the minimum subscription amount is 50 thousand yuan).
From the organizational form, the company type has some defects, such as asymmetric information between fund managers and shareholders, difficulty in protecting shareholders' rights and interests, and double tax burden (corporate income tax and individual income tax on shareholders' dividends). Because of the separation of ownership and income right, the contractual trust property is relatively independent, and the capital income can be protected by law. In addition, the contractual type only needs to pay taxes once, which can improve the fund's income. As a mature REITs market, the United States is mainly corporate. Considering that the initial development of REITs in China should focus on stability and reduce the possibility of risks, China should adopt the contractual model in the early stage. Although it is not conducive to the expansion of the fund, it can ensure the relative stability of the fund and will not dissolve or weaken the fund because of the withdrawal of investors.
Development advantages:
REITs have unique advantages that other investment products do not have. First, the long-term return of REITs is determined by the value of the real estate it invests in. Real estate has low correlation with other financial assets, and its volatility is relatively low, so it has the function of preserving value in the period of inflation. Second, double taxation can be avoided, and there is no minimum investment capital requirement; Third, REITs must distribute 90% of the income as dividends according to regulations, so that investors can obtain relatively stable immediate income; Fourth, REITs' business in the United States is usually limited to the sale and lease of real estate, which is taxed according to the changed securities, that is, most of the profits are directly distributed to investors, and the company does not have to pay capital gains tax; Fifth, ordinary small and medium-sized investors can participate in real estate investment with little money even if they don't have much capital; Sixth, because REITs are basically listed on major stock exchanges, compared with the traditional real estate investment for the purpose of ownership, it has quite high liquidity; Seventh, listed REITs directly invest in the real estate industry, with low information asymmetry, and their operations are directly supervised by independent directors, analysts, auditors, commercial and financial media. In essence, REITs belong to a way of asset securitization. Real estate investment trust funds have two typical modes of operation. One is that SPV issues income certificates to investors, concentrates the raised funds on commercial real estate such as office buildings and shopping malls, and repays the cash flow generated by these operating properties to investors. Secondly, the original property developer packaged some or all of its operating property assets to set up professional REITs, and according to its income, such as annual rent, mortgage interest, etc., it was sold to investors in several shares on average, and then paid dividends regularly, which actually provided investors with a bond-like investment method. In contrast, the cash flow of commercial real estate such as office buildings and shopping malls is far more stable than that of traditional residential real estate. So REITs are generally only applicable to commercial real estate. In addition, judging from the international development experience of REITs, almost all REITs' business models are to acquire existing commercial real estate and rent it out to repay investors with rent, and few REITs exist for development investment. Therefore, REITs are different from real estate project financing in the general sense.
Development significance:
The introduction of real estate investment trust funds has played a very important role in China.
First of all, the introduction of real estate investment trust funds is conducive to improving China's real estate financial structure. Real estate trust and investment funds participate in both primary and secondary market financial activities abroad, which is an important symbol of the development of real estate finance and an important means to promote the secondary market of real estate finance. Real estate trust and investment funds directly integrate market funds into the real estate industry, which is a great supplement to indirect financing by banks. Therefore, the introduction of real estate investment trust fund will greatly improve the completeness of real estate finance, which is an inevitable choice for real estate finance to mature.
Secondly, the introduction of real estate investment trust funds will help to disperse and reduce systemic risks and improve financial security. From the perspective of real estate finance, the introduction of real estate trust funds with market credit characteristics will improve the systemic risk resolution ability of real estate finance in the current period and improve the security of the financial system to a certain extent.
Third, the introduction of real estate investment trust funds will help to dredge the circulation of real estate funds. The introduction of real estate investment trust funds can avoid the hard impact of bank-related policies on the real estate market under the single financing system, slow down the overall impact of policies with certain specific purposes on the whole market, and help alleviate the mismatch contradiction of China's financial system. The inherent characteristics of real estate determine that real estate investment trust funds have the function of maintaining and increasing value, so the income of real estate investment is relatively stable.
Operation mode:
As an innovative financing method of real estate enterprises, real estate investment trust fund first appeared in the United States in the 1960s. At the end of 1960s, developed countries such as the United States and Japan had formed a preliminary mature real estate securitization model. Since 1980s, real estate securitization has developed rapidly, and other countries and regions, such as Britain and Canada, have also carried out securitization business. In 2003, REITs began to operate in the Hong Kong real estate market, and its funds were managed externally. In June 2005, Hong Kong promulgated new regulations, allowing real estate investment trusts to invest in overseas real estate, and allowing loans not to exceed 45% of the value of real estate held.
The establishment of REITs in the United States is mainly determined by the securities investment law and related tax laws. REITs, like other financial products, must abide by the Securities Investment Act of the United States 1933 and the relevant laws of various states. The tax law stipulates some main conditions for REITs to enjoy tax benefits, which explains why the development of REITs in the United States revolves around the changes in the tax law. In July 2003, the Hong Kong Securities and Futures Commission (SFC) promulgated the Code for Real Estate Investment Trust Funds, which clearly stipulated the conditions for the establishment, organizational structure, qualifications of employees, investment scope and profit distribution of REITs. To a great extent, Hong Kong has borrowed from the structure of REITs in the United States, with trust plans (or real estate companies) as the main investors and professional services provided by real estate management companies and trust managers.
According to the Code for Real Estate Investment Trusts, real estate investment trusts in Hong Kong must distribute not less than 90% of their net profits to trust unit holders in the form of dividends every year. Although the United States, Australia and other Asian countries all have requirements for the income distribution of real estate investment trust funds, their requirements for the distribution of real estate investment trust funds are related to tax regulations. In particular, the development of REITs in the United States is basically driven by tax incentives, and the income distribution requirement is actually the need to avoid double taxation. Hong Kong's Real Estate Investment Trust Code stipulates that listed REITs must pay real estate tax, and REITs face double taxation of company capital gains and real estate tax. Hong Kong has adopted a more cautious and restrictive model. The Code of Real Estate Investment Trust Fund not only stipulates the structure, investment objectives and income distribution, but also makes very strict provisions on the qualifications and responsibilities of participants in REITs structure.
It can be seen that REITs in the United States have always been developed around the tax law, and the origin of REITs has obvious tax preferential characteristics; However, the supervision of REITs in Hong Kong is not achieved through the leverage of tax incentives in the tax law, but through special legislation, revision of investment, trust and other related laws or new laws, which have made rigid provisions on the structure, investment objectives, income distribution and other aspects of REITs, and there is no obvious driving feature of tax incentives. Therefore, it can be said that REITs in Hong Kong are development and special provisions, and this model has a positive effect on controlling the risks of new products such as REITs. The development of REITs in the United States caters to the requirements of the market and can be said to be very market-oriented. The structural variation brought by the marketization of REITs also benefits from the relatively mature market economy and its relatively mature financial system. Because the development history of REITs in Hong Kong is short, the formation of REITs is only within the normative framework required by various special laws and regulations, so REITs have not formed the structural variation caused by the market environment in Hong Kong.
Development policy:
system of law
As a new real estate investment tool, real estate investment trust funds (REITs) are an investment product that needs the combination of real estate industry and financial industry to allocate funds in the market. It is necessary to establish a perfect legal system to ensure and maintain the fairness, justice, openness and transparency of the whole market, so as to promote the healthy and reasonable development of real estate investment trusts. To establish a perfect legal system, it is not enough to promulgate a single trust law and investment fund law. To make the law detailed and complete, and to achieve this goal, we must support some other relevant laws and regulations. First of all, we should further improve the company law or formulate investment company law, investment consultant law and other laws and regulations specifically for the development of investment funds. Secondly, some special management measures of real estate investment trust funds can be formulated, such as restrictions on investment channels and investment ratio. So that the real estate investment trust funds in China developed in a relatively standardized form from the very beginning. In addition, it is necessary to reform the tax law, avoid double taxation and create a good tax environment for its development.
personnel training
Speed up and strengthen the talent training of real estate investment trust funds. To develop REITs, it is necessary to establish a professional management talent team proficient in business, real estate market and enterprise operation as soon as possible. A professional real estate trust operator or professional usually has a strong ability to operate real estate projects, a keen sense of the market, and can make appropriate investments in the right projects at the right time; At the same time, such professional institutions or professionals are also analysts in the securities market. To strengthen the training of real estate trust talents, it is necessary to establish a professional management talent team proficient in trust business, real estate market and enterprise operation as soon as possible. At the same time, it is necessary to actively promote the construction of service-oriented talents such as lawyers, accountants, auditors and asset appraisers, which are vital to the trust business.
ethical risk
Judging from the operating experience of American real estate investment trusts, the trustee committee or the board of directors is responsible for their operation and management. The trustee committee or board of directors usually consists of more than three trustees or directors, most of whom must be "independent". Drawing lessons from the experience of the United States, China can consider setting up a similar trustee committee in trust companies that carry out real estate investment trust business, which is responsible for formulating the business development plan of real estate trust, requiring trustees to have no interest relationship with investment consultants and related real estate enterprises, and creating an environment or system to make the interests of investors and managers as consistent as possible, which is very important for the development of REITs. In addition, the form of limited partnership can better solve the problem of constraints and incentives. The unlimited liability of managers and the performance reward system of managers can effectively bind the risks and interests of managers and investors together, encourage managers to manage various investments, maximize value and prevent risks to the maximum extent.
credit system
Establish a trust enterprise credit system, promote the integrity of the trust market with a perfect legal system, and ensure the healthy development of the trust market. Establish a credit information system for trust enterprises, classify the information types of trust enterprises, and realize the opening of credit information data; Developing credit intermediary; Establish a standardized trust industry credit database; Establish and improve the disciplinary system for dishonesty; Standardize the development of credit rating industry; Vigorously develop credit management education of trust enterprises.
Disclosure system
Some trust companies put the raised funds into related parties, which guarantee them, but this is not revealed in the trust contract, which makes investors unaware of the hidden risks. Trust and investment companies shall disclose information in a true, accurate, timely and complete manner, including audited annual reports and interim reports on major issues. , disclose all kinds of risks and risk management and corporate governance information in the annual report, and disclose the total amount of related party transactions and major related party transactions in the accounting notes.