1. Policy opportunities
On March 25, the China Securities Regulatory Commission issued the "Notice on Further Promoting the Normalized Issuance of Real Estate Investment Trusts (REITs) in the Infrastructure Sector", which pointed out that it is necessaryBroaden the types of pilot assets, expand the scope of market participants, and promote the normalization of ...... of expanding offerings
Infrastructure REITs, this is going to be the wind! Maybe the little friends in front of the screen don't know what infrastructure REITs are. Here is a brief introduction.
(1) Definition of the concept of infrastructure public REITs
The so-called infrastructure public REITsIt refers to the standardized financial products that raise funds from social investors in accordance with the law to form ** property, hold infrastructure projects through special purpose vehicles such as infrastructure asset support, actively manage and operate the above-mentioned infrastructure projects by ** managers, etc., and distribute most of the generated income to investors.
In layman's terms, it is to revitalize the existing infrastructure such as warehousing and logistics, toll roads, etc., and raise funds from investors publicly, so that investors can obtain income through the operation of infrastructure, and the funds raised by the original equity holders can be invested in other new infrastructure projects.
In May 2020, the China Securities Regulatory Commission (CSRC) and the China Securities Regulatory Commission (CSRC) jointly issued the Notice on Promoting the Pilot Work of Real Estate Investment Trusts (REITs) in the Infrastructure SectorPublic offering of infrastructure REITsPrologue.
In addition to this document, in recent years, the China Securities Regulatory Commission and other departments have also issued a series of supportsPolicy document for public infrastructure REITs
After several years of hard exploration,27 have been successfully issued**, covering a number of fields,It includes six industries: industrial parks, toll roads, affordable rental housing, energy infrastructure, warehousing and logistics, and municipal infrastructure. These cases have successfully increased the valuation of assets and revitalized the stock assets! In addition to improving corporate debt levels, the funds raised at the premium can also be invested in other infrastructure projects to expand effective investment. It's beautiful!
In order to better implement infrastructure REITs, many places have carried out REITs project reserve work, in order to cultivate projects in advance and ensure the issuance of projects.
In the context of revitalizing stock assets and expanding effective investment. Recently, REITs have started the normal issuance again, and it seems that REITs are really popular! But whether REITs are good or not, how to play them exactly?
Second, the stone of the mountain
In order to better answer this question, we can first take a look at the cases of successful releases in recent years.
For example, the industrial park project with the most successful cases of REITs is issued
Case 1: Suzhou Industrial Park public offering REITs
Suzhou Industrial Park successfully issued 349.2 billion yuan closed**。According to the prospectus, the project is held by two major project companies with two underlying assets, both of which have very high-quality operating income. The rental levels of these two industrial parks are as high as 41 yuan and 61 yuan per square meter per month, and the occupancy rate has reached 90% and 70% respectively at the end of 2020.
Therefore, after valuing the project through the income method, the book value of the assets of the two industrial parks is only 98 vs. 8600 million yuan, butThe appraised value of the assets reached 183 vs. 15200 million yuan, a premium of up to 82%. That is, in accordance with the requirements of REITs, the issuer itself subscribed for 139.4 billion yuan of shares, accounting for 40% of the shares, after repaying the loan, the net ** funds can reach 209.5 billion yuan! And this is used in the subsequent construction of park infrastructure and high-tech industrial parks. In the form of capital investment, the project construction of more than 9 billion yuan has been warped.
Case 2: Shenzhen Bosera China Merchants Shekou Industrial Park public offering REITs
Bosera China Merchants Shekou Industrial Park is one of the first nine public infrastructure REITs in China.
Shekou Industrial Park REITs selects two high-quality assets of Shekou Net Valley, Shenzhen Wanrong Building Management *** hereinafter referred to as "Wanrong Building"), Shenzhen Wanhai Building Management *** hereinafter referred to as "Wanhai Building") and supporting commercial projects. Wanrong Building and Wanhai Building, with a leasable area of 41,611m and 52,646m respectively, have clear ownership, high-quality tenants, high dispersion, and excellent historical operation. According to the evaluation results, the valuation of the two infrastructure projects of Wanrong Building and Wanhai Building reached 253.4 billion yuan.
Case 3: Wells Fargo pioneered water REITs
There is also the first water REITs in Wells Fargo, which is also the first public REITs project with a green project as the underlying asset.
The underlying assets of the project are four large-scale wastewater treatment plants. From the point of view of payment method, although the return mechanism of this project is ** payment. However, according to the principle of penetration, the essence of a sewage treatment project is that the user pays the fee to meet the requirements for the issuance of REITs.
fromGuaranteed return on investmentSee, the four projects in Shenzhen and Hefei have signed contracts such as the "Franchise Agreement" with the first party, and the right of the project company to obtain reasonable service fees and reasonable profits has been determined from the contract level. At the same time, the contract sets up a clause of "basic sewage treatment capacity", that is, if the actual amount of water treated to meet the standard is lower than the basic water volume, the project company has the right to charge sewage treatment fees according to the corresponding basic water volume in the operation year to ensure the minimum income; In addition, a price adjustment mechanism is set up for sewage treatment service fees, that is, the sewage treatment service fees are reviewed and calculated every three years according to factors such as electricity costs, labor costs, chemical costs, inflation, etc., and if the change range reaches more than 5%, you can apply for adjustment of sewage treatment service fees. Therefore, under the condition of stable operation, the return on investment will continue to be stable and good, and the income** will be reasonably dispersed to meet the issuance requirements.
The stones of the mountain can be used to attack jade, what can we learn from these cases?
Third, you can attack jade
Through such cases, it can be seen that there are three REITs issuedKeys to success
First, the ownership is clear. For example, the ownership of this project in Suzhou. The two companies 100% controlled by the Suzhou Industrial Park Management Committee have the ownership and income rights of the projects in accordance with the law, and the two project companies established also hold the underlying assets of the issuance of infrastructure REITS in accordance with the law. The ownership of infrastructure projects is clear and the scope of assets is clear.
Second, the benefits are sufficient. All three projects have very consistent returns**. For example, Suzhou Industrial Park, the cash flow of the project was stable for three years before its issuanceAnd the revenue is generated by market-oriented operations, and does not rely on non-recurring income such as third-party subsidies。Among them, the occupancy rate in 2020 was as high as 90% and 70% respectively, meeting the income requirements of REITs issuance.
Third, the creditor's rights are clean. REITs issue borrowings for projects to be repaid. If there is too much debt, the issuance of the project is likely to outweigh the losses. After subscribing to its own shares and repaying the borrowing at the same time, the net ** funds may be very limited or even negative.
Thus,Clean debt is essential for the issuance of REITs.
So, in addition to these key points, let's take a look at them specificallyWhat kind of project can issue REITs?
First of all, which project areas can be used as REITs? According to the Notice on Further Improving the Pilot Work of Real Estate Investment Trusts (REITs) in the Infrastructure Sector and the newly released Notice on Further Improving the Pilot Work of Real Estate Investment Trusts (REITs) in the Infrastructure Sector, a total of 11 types of projects can be REITs, including:11 major areas, including transportation infrastructure, energy infrastructure, and newly allowed consumption infrastructure.
Do REITsWhat are the requirements? The core needs to be metSix compliance conditions, clear ownership, land use compliance with laws and regulations, etc.
First, the ownership is clear. The so-called clear ownership is the most basic requirement for REITs projects: the ownership of infrastructure should be clear, the scope of assets should be clear, and the sponsor should directly or indirectly own the ownership of the project, the right to franchise or the right to operating income.
Second, land use must comply with laws and regulations. For non-PPP projects in which the project company has land use rights, if the land is acquired by way of allocation or agreement transfer, it must ensure that the original administrative department has no objection to the issuance of REITs, and if it is obtained by way of bidding, auction and listing, all the key elements of the project land acquisition must be clearly stated.
Third, the project should be transferable. The project can be transferred, and its initiator and the relevant shareholders of the project company have fulfilled the complete internal decision-making procedures and agreed to the transfer through consensus.
Fourth, the project is mature and stable. This is actually one of the most difficult thresholds for project issuance REITs. It is necessary to ensure that the project has stable cash flow, and the internal rate of return and net cash flow distribution rate can meet the requirements of the issuance.
Fifth, the asset scale meets the requirements. This is the most basic compliance requirement, and the relevant institutions have no record of major violations of laws and regulations in production and operation, financial supervision, market supervision, taxation, etc.
Sixth, the participants meet the requirements. This is the most basic compliance requirement, and the relevant institutions have no record of major violations of laws and regulations in production and operation, financial supervision, market supervision, taxation, etc.
Looking at it this way, it is not easy for REITs to be made! As a local government, what can you do if you want to issue REITs?
FourthWhat can I do?
What can be done now? ——Find projects, reserve projects, and plan projects that can be issued in the future!
The first is to find a projectIt is to conduct research on platform companies with high-quality assets on a regional scale, and find out whether they have qualified assets according to the requirements of REITs, or assets that can meet the requirements through efforts.
This is followed by reserve projectsThat is, the potential projects that will be sorted out will be further sorted out and planned, so that they can continue to improve, and in recent years, they will be able to meet the conditions for the issuance of pre-REITs and even REITs. At the same time, according to the field and maturity level, the reserve project can be guided and cultivated.
Finally, it is necessary to plan future projects。This is actually a very important step. Because most infrastructure projects are "quasi-public welfare projects", the return mechanism of the project is designed in accordance with the quasi-public welfare during construction, and it is difficult to meet the income requirements of REITs issuance in the future. Therefore, if you want to successfully issue REITs, a good way is to start planning new REITs projects from now on.
From the beginning of the construction of the project, we will plan for the issuance of REITs in terms of income, ownership, land, scale, etc., and lay a solid foundation for the future issuance of REITs!
After years of construction, a large number of stock assets have been formed in the field of infrastructure. REITs are an effective way to revitalize existing assetsI hope that all partners can open up the path of REITs, revitalize the stock, expand effective investment, and accelerate the construction of a new development pattern! If you have any other good ideas, please feel free to communicate with us in the comment area and fan base!
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