Introduction
The boom of insurance capital investment in real estate has continued momentum, but we cannot ignore the current situation of pressure on the operation of some business formats.
Text: Shen Xiaoling, Wang Hui, Chen Jiafeng, Zhang Shaoxian.
Insurance capital and real estate complement each other, and the cooperation model has become normalized
1. Insurance capital has entered the real estate market for nearly 20 years, and the policy is closely related to the policy to guide the investment of insurance capital into the real estate market, and real estate is a key link between insurance capital and the real estate market. According to the Interim Measures for the Administration of the Use of Insurance Funds adopted in 2010, insurance capital refers to the capital, provident fund, undistributed profits, reserves and other funds denominated in domestic and foreign currencies by insurance group (holding) companies and insurance companies, while the real estate invested by insurance funds refers to land, buildings and other fixtures attached to the land, such as office buildings, commercial buildings, hotels and other traditional investment property types and logistics and warehousing, industrial parks, data centers, Emerging types of investment properties, such as rental housing, are all within the scope of real estate investment by insurance funds. Since the real estate assets that can be invested by insurance capital are closely related to real estate, insurance capital investment in the real estate market is the main embodiment of insurance capital real estate investment. According to CRIC statistics, since around 2006, insurance institutions with strong financial strength have tested real estate through construction and purchase of office buildings for their own use, and the relevant policies for insurance investment in real estate can be roughly divided into two stages: the trial period and the improvement period.
Trial period (2006-2010): Preliminary establishment of the legal status of insurance capital investment in real estate (omitted).
Improvement period (2011-present): Broaden the investment method and guide the investment direction of insurance capital (some omitted).
At this stage, the policy environment for insurance capital to invest in real estate has gradually improved, and more clear requirements have been made on the investment method and investment direction. In terms of investment methods, it is clearly stated that insurance funds can enter the real estate market in the form of indirect investment, and at the same time, insurance funds can invest in PPP projects and public REITs; In terms of investment direction, it has continuously emphasized the prohibition of insurance capital from entering the field of real estate development, and guided insurance capital to enter the long-term rental apartment market, shantytown renovation, urban infrastructure, pension industry, etc.
2. Insurance capital and real estate take what they need, and the investment period and income adaptability are high.
In addition to policy factors, the "mutual benefit and win-win" of the two industries' demand for funds is also another important factor in the entry of insurance funds into the real estate market. Specifically, the entry of insurance funds into the real estate market is mainly based on the consideration of value preservation and profit motives.
Motivation for value preservation: The investment cycle of insurance funds is long, and stability is the first priority (some omitted).
From the perspective of the characteristics of insurance capital, the scale of insurance capital is large, the investment cycle is long, and high-quality real estate investment such as commercial, office, industrial park can not only accommodate a large amount of funds, but also generate a certain amount of cash flow for its rent, and even generate a certain premium due to the development of the sector, which is very consistent with the investment period and risk appetite of insurance capital.
Profit motive: insurance capital to enjoy dividends, investment in pension, health to help the development of the main business (omitted).
3. Normalized cooperation of "insurance capital + real estate", four common ways to enter the real estate market (some omitted).
Insurance capital has been in the real estate market for nearly 20 years, and a variety of common cooperation models have been formed, which can be divided into the following four types:
First, the listed company carries out equity investment. Historically, many real estate companies have more or less appeared behind the participation of insurance capital, including Poly Development, Vanke Real Estate, China Merchants Shekou, Country Garden, etc. For example, in April 2015, Ping An Life became the second largest shareholder of Country Garden, which was also the first time that Ping An made an equity investment in a large real estate company with life insurance funds, and began an eight-year in-depth relationship with Country Garden.
The second is to participate in the investment of public REITs. Public REITs are naturally compatible with insurance funds in terms of investment period, risk and return, etc., and in November 2021, the policy allowed insurance funds to participate in the investment of public REITs. Insurance funds usually invest in public REITs through strategic placement, offline placement, and secondary market investment, and the preferred types of underlying assets are industrial parks and warehousing and logistics.
Third, the most common way for insurance capital to intervene in real estate development is to acquire land independently or jointly through the open market, and to cooperate with real estate enterprises in development. Due to the regulations of the regulators, insurance capital shall not be directly engaged in real estate development and construction, shall not invest in the development or sale of commercial residences, insurance capital land is mostly medical and health, pension service industry, commercial office operation and other construction land, in the project development, insurance capital often plays the role of "investor", the partner or the introduction of real estate enterprises as the actual party.
Fourth, the acquisition of holding real estate projects to obtain rental returns. Real estate is in line with the long-term investment attributes of insurance capital, and high-quality properties such as commercial offices, industrial parks, warehousing and logistics are all preferred investment targets for insurance capital.
In addition to the above four types of direct investment, there are also insurance funds that indirectly invest in real estate through investment in financial products such as debt plans and equity plans, which can better circumvent the restrictions on the investment of insurance funds in projects.
At present, insurance capital has become a force to be reckoned with in the real estate market, and its every move has attracted the attention of the industry. As the real estate market enters a period of deep adjustment, how to choose insurance funds, the following article will further focus on the trends and trends of insurance capital investment in the real estate industry.
Insurance capital on real estate stocks and public REITs.
Configure "trade-off".
This section focuses on the current allocation and investment trends of insurance funds to real estate stocks and public REITs, analyzes the holding logic of insurance funds under the real estate downturn, and the opportunities and challenges faced by participating in public REITs. 1. Under the downturn, insurance capital adjusts real estate stocks, but the current is not low.
The total proportion of insurance capital to real estate stocks is nearly 35%, and private insurance capital is the most frequent (some omitted).
In 2004, the regulator approved the first direct investment of insurance capital in the ** market, and in 2013-2015, real estate entered a high boom cycle, and real estate stocks became a better choice for insurance capital to allocate assets due to high dividend yield and low valuation. In 2016, the promulgation of the Notice on Matters Concerning the Regulation of Short- and Medium-term Life Insurance Products supervised the issuance and operation and management of Wanneng Insurance in an all-round and systematic manner, and the phenomenon of "hostile takeovers" of insurance funds was stopped. Since the second half of 2021, private enterprises have been out of insurance one after another, market confidence is insufficient, real estate fundamentals have deteriorated, and insurance funds have successively become real estate stocks. According to incomplete statistics, including Taikang, Dajia, Junkang, Harmony, Huaxia, Sunshine Life, etc., have sold real estate stocks, and there are many Vanke, China Merchants Shekou, Overseas Chinese Town, Poly, Gemdale, etc.
14 real estate stocks suffered from insurance funds**, 7 increased, and 6 remained unchanged (some omitted).
Real estate companies mainly suffer from factors such as liquidity, sluggish performance and pressure on earnings**. In terms of the nature of enterprises, the first real estate enterprises are mainly state-owned enterprises and private enterprises, and the number of state-owned enterprises, private enterprises, central enterprises and mixed reform accounts for the proportion. 4% and 143%。In terms of liquidity, all private enterprises (4) are in distress, while the remaining 10 corporate real estate companies have not yet broken out in a credit crisis. In terms of performance growth, except for Tianbao Infrastructure, which was not disclosed, in 2023, only the sales of Zhonghua Enterprises (Shanghai Real Estate) and China Merchants Shekou will increase, and the performance of the remaining 11 companies will decline, with Country Garden and Beichen declining significantly. In terms of profitability, the net profit of 9 real estate companies in the latest statement is in a loss state, 1 is in 1-2%, and only 4 have a net profit margin of more than 7%. The insurance capital ** Poly, Vanke, China Merchants and China Enterprises and other relatively stable fundamentals of real estate companies, more due to short-term capital drawdown. On the whole, the current enthusiasm of insurance funds for the allocation of the real estate sector is not high, and the valuation of the sector has been in a historical position for a long time. Based on the judgment of the whole ticket market and the market, the insurance capital was adjusted, and the real estate stocks in distress were cleared, and some of the performance and profits were under pressure. However, at the end of 2023, there are still 21 insurance companies in the top ten shareholders of real estate stocks, of which 13 real estate stock insurance companies still hold more than 5% of their shares, and at the end of 2020, the number of insurance companies holding more than 5% of the shares is only 14. Insurance capital pursues absolute returns and the safety of funds, while the high dividends and low valuation characteristics of real estate stocks are highly consistent with their investment logic. 2. The scale of the public REITs market is limited, and it is difficult for insurance funds to achieve large-scale allocation needs.
The strategic placement amount of insurance capital reached 8.1 billion, with a preference for industrial parks, warehousing and logistics (omitted).
CICC Prologis warehousing and logistics REIT is the most sought after by insurance funds, and has been placed for nearly 1.4 billion yuan (some omitted).
According to the relative proportion of the strategic placement of insurance capital (the proportion of the strategic placement of insurance capital in the strategic placement and the proportion of the strategic placement in the total issuance), the relative share of five public REITs with industrial parks and warehousing and logistics as the underlying assets, including Guotai Junan Dongjiu New Economy REIT, Zhongjin Prologis Warehousing and Logistics REIT, CCB Zhongguancun Industrial Park REIT, Harvest Jingdong Warehousing Infrastructure REIT, and Huaxia Hefei High-tech Industrial Park REIT, accounts for more than 20% of the relative share of the strategic placement.
Among the 19 property rights public REITs, the insurance capital is the only one that has not strategically invested in ChinaAMC Jinmao Commercial REIT, and the strategic investment share of Jiajiamei Consumer REIT, which also has consumer infrastructure as its underlying asset, accounts for only 1%. The underlying asset of Jinmao's infrastructure REIT is Changsha Lanxiu City, with an estimated distribution rate of 4 in 202492%, and the distribution rate of Wumart Group is even as high as 64%。However, insurance funds still do not prefer commercial real estate, which may be due to the fact that the overall rate of return of commercial real estate is lower than that of industrial parks, warehousing and logistics, and the annualized rate of return of commercial real estate is 29%-5.Between 4%, the domestic commercial real estate development model is dominated by the asset-heavy model of self-investment, self-construction and self-management by developers, and the aggressive leverage ratio and expensive financing costs continue to erode operating income, which has a serious negative impact on the sustainable operation of commercial real estate.
In terms of the amount of strategic placement of insurance funds (including expansion), the strategic placement amount of CICC GLP warehousing and logistics REIT ranks first, reaching nearly 1.4 billion. Among them, the first strategic placement amount was 116.7 billion yuan, by Taikang Life Insurance with 389 yuan to subscribe for 20% of the ** share, expand the strategic investment amount of 2300 million yuan, by Taiping Asset Management, Great Wall Wealth Insurance Asset Management, Pacific Asset Management with 4228 yuan subscribed 02.4 billion copies, 01.7 billion copies and 01.4 billion shares. In addition, CCB Zhongguancun Industrial Park REIT, Hua'an Zhangjiang Industrial Park REIT, Bosera China Merchants Shekou Industrial Park REIT and other insurance funds have placed more than 300 million yuan in their strategic placements.
Insurance funds are turning to the stock market for investment.
Plus** quality real estate.
1. Ping An, China Life and other insurance funds have taken action one after another, and large real estate transactions are frequent (some omitted) Ping An Life, as the "leader" of insurance investment in real estate, has made continuous efforts in the bulk real estate transaction market and continued to increase investment. Following the RMB33 billion acquisition of part of CapitaLand's six Raffles City asset portfolios in 2021, the company spent RMB50 billion in 20221.5 billion yuan to take over the Beijing Sino-Ocean Rui Center project under Sino-Ocean Group, and in January 2023, it will invest in four real estate projects in the industrial park, with a total investment amount of no more than 733.3 billion yuan, and these projects are currently in the actual investment stage. According to the statistics disclosed by the Insurance Association of China, up to now, Ping An Life has invested a total of 549 in five large-scale real estate projects5.1 billion yuan. In addition, it is worth noting that Xinhua Insurance launched 10 billion ** investment in real estate, and it is expected that the real estate layout will be accelerated in the later period. At the beginning of 2024, New China Insurance announced that it had signed a limited partnership agreement with CICC Capital to jointly establish **. The scale of the company is 10 billion yuan, and Xinhua Insurance (as a limited partner) intends to subscribe for 999.9 billion yuan, CICC Capital (as the general partner) intends to subscribe for 1 million yuan, which will directly or indirectly invest mainly in the invested enterprises of the assets of the holding real estate project.
2. Commercial assets are the most important investment, and the sale of real estate enterprises drives insurance capital to enter the market. According to statistics, since 2021, equity investment and property investment have accounted for more than 8 percent. On the one hand, in the downward cycle of the industry, compared with investment targets such as residential development projects and real estate stocks, holding commercial assets have a higher margin of safety and long-term investment value. At present, insurance investment projects are mainly located in the core business districts of first-tier cities such as Beijing and Shanghai, which are mainly based on asset preservation and long-term investment expected returns. On the other hand, the sell-off of real estate enterprises further drives the entry of insurance funds, "** commercial assets are the most widely held real estate enterprises in the layout of real estate, under this round of cyclical adjustment, the industry has accelerated the clearance, asset disposal has increased, and some liquidity pressure of real estate companies to speed up the realization of assets, return funds, high-quality commercial assets are frequently put on the shelves, and many of them are discounted, bringing opportunities for the low level of insurance capital.
3. Explore investment opportunities in subdivided tracks, and actively allocate high-quality projects such as logistics and industrial parks (omitted).
The real estate investment boom is expected to continue.
ABS and REITs broaden investment channels.
As the real estate industry enters a period of deep adjustment, and from the incremental era to the stock era, the investment preference of insurance capital has also shifted from corporate bonds, real estate investment to real estate projects, Ping An, China Life, Taikang, China Post and other insurance funds have been concentrated in the bureau, and increased investment in high-quality projects with long-term value such as commercial complexes, office buildings, logistics and warehousing, industrial parks, and pension communities. Safety, liquidity and profitability have always been the three principles of insurance capital investment, combined with the development trend of the industry and its own asset allocation needs, it can be expected that the future investment of insurance funds in real estate will still be concentrated in the real estate field.
On the one hand, the value of real estate investment has emerged, which occupies an increasingly important position in the asset allocation of insurance funds. In the face of the adjustment of the real estate market and the fluctuation of the secondary market, real estate investment can optimize the asset allocation structure, hedge investment risks to a certain extent, and better balance returns and risks, especially high-quality real estate projects are expected to have better long-term stable returns. At the same time, the real estate is at a low level as a whole, and the disposal of superimposed market assets is good, which is good for insurance funds, and some cost-effective projects in core cities, core areas and core areas will still be selected for investment.
On the other hand, the approval of insurance capital to carry out ABS and REITs business will further promote the participation of insurance capital in real estate investment. Although the overall market size of ABS and public REITs is relatively limited, it is difficult to meet the large-scale asset allocation needs of insurance funds, with the continuous expansion of the underlying asset types by future policies, the market scale has great potential for development. On March 3, 2023, the Shanghai ** Stock Exchange issued and implemented the Guidelines for the Application of the Rules for the Confirmation of Asset-Backed Listing Conditions of the Shanghai ** Exchange No. 5 - Relevant Requirements for Insurance Asset Management Companies to Carry out Asset-based Business (Trial) to encourage qualified insurance asset management companies to actively carry out ABS and REITs business. On October 13, 2023, the first batch of five insurance asset management companies of China Life, Taikang, CPIC, PICC and Ping An were approved to carry out ABS and REITs business on a pilot basis, and on December 20, 2023, the "Huatai-Zhongjiao Road Jianqing West Bridge Holding Real Estate Asset-backed Special Plan" has been successfully established.
On the whole, the boom of insurance capital investment in real estate has continued momentum, but we cannot ignore the current situation of pressure on the operation of some business formats, and we should be particularly cautious in the selection of real estate projects, give more consideration, reasonably and appropriately control the allocation ratio, and do a good job in risk management and control in all aspects of 'fundraising, investment, management and withdrawal'. In addition, the approved insurance capital can also actively carry out asset-based investment, and seize the first-mover advantage of REITs and ABS for asset allocation.
It's easy to enjoy the purchase information, come and pay attention to Leju.com].
Article**: Leju buys a house