What is the significance of the launch of infrastructure public offering REITs?
1 Broaden social capital investment channels and increase the proportion of direct financing.
Traditional infrastructure construction and real estate development are mainly based on credit and bond financing. Under the high debt cost, real estate enterprises usually adopt the "development-sales" model with high turnover rate to maintain profit rate by improving asset turnover efficiency.
After the emergence of REITs, corporate financing has changed from debt financing to equity financing, which can reduce the financial cost brought by corporate debt financing. The transformation of real estate enterprises to "hold-operate" mode will improve the management level of real estate and enhance the overall competitiveness of enterprises.
2. It is helpful to revitalize the massive stock of assets and provide an exit channel for infrastructure investment.
China's infrastructure construction and real estate investment have long relied on debt financing. The high leverage behavior of local governments and real estate enterprises intensifies the accumulation of debt risks, which may transmit risks to the banking system, thus affecting the stability of financial markets.
The introduction of infrastructure REITs can provide a trading market for massive stock assets. Market-oriented pricing of infrastructure assets can improve the liquidity of existing assets, revitalize existing assets, provide exit channels for local governments and real estate developers, and realize the dispersion of risks in the whole economic system.
3. As a large-scale asset, trust will provide a new supply for the asset management market.
With the rising income of China residents, the scale of China's asset management market is also expanding, increasing by nearly 19 times during the 10 year from 2008 to 2007. However, real estate is an extremely important asset, but ordinary investors in China cannot directly invest in real estate through the asset management market.
The introduction of REITs will lower the threshold of real estate investment, help ordinary investors to participate in real estate investment, and let every ordinary investor fully share the dividends of national economy and real estate market development. At the same time, the low correlation between real estate and other major assets also makes it possible for investors to diversify risks and realize asset allocation.