Kunlun Trust Development Research Weekly Information No. 172

Research Results
2014/11/04 16:11


Trust REITs business: waiting for regulatory open

Some long-awaited real estate trust companies have done some attempts on the operation of REITs business, but the first domestic REITs business was preempted by brokerage firms. At present, the SFC has been making greater efforts to promote the REITs system. It is reported that it is expected that the introduction of the rules during the year will be favorable to the trust companies of the participating securities companies.

REITs basic pattern

REITs are real estate investment trusts (Real Estate Investment Trusts), which is essentially a branch of asset securitization. Equity-type REITs invest and directly own the property rights of immovable property, which mainly derive their income from the rents generated from the immovable property held; mortgaged REITs invest funds in real estate loans or loan-supporting documents (MBS), whose revenue mainly comes from loan interest; Type REITs, both invest in real estate property, but also invest in real estate loans. REITs are generally listed on the stock exchange and are publicly traded to provide investors with relatively stable dividend income. Due to its revenue characteristics, REITs mainly invest in large-scale commercial properties with stable revenue.

The establishment of REITs on the one hand broaden the financing channels for real estate companies; on the other hand for institutional investors and individuals such as insurance companies to provide high liquidity of investment objects, so that REITs buyers while maintaining the flow of funds, the original need a lot of money involved Real estate investment, and access to real estate investment and operating income.

At present, there are mainly three types of REITs in our country. One is to provide trust financing, ie standardized REITs, on the basis of mature properties that real estate enterprises have built. The other is real estate investment funds that directly participate in the real estate development process, namely, The form of claims to invest in real estate development, similar to foreign private real estate funds; Third, the government low-cost housing REITs.

Brokers prospective REITs pilot

In April this year, CITIC Securities launched the "CITIC Sailing Special Asset Management Plan". It was named the first REITs and was a pilot product for the launch of public REITs products under the guidance of the CSRC. The product planning period of 3-5 years, to take a securitization, a private placement of investment in Beijing CITIC Securities Building and Shenzhen CITIC Securities Building, and a wholly owned subsidiary of Tianjin Jingzheng Property, Tianjin Shenzheng property all transferred to the management Fang Zhongxin stone fund. The base income of its priority is 5.5% -7%. Upon exit, it gains 10% of the capital appreciation. The secondary daily income meets the residual income of the priority base income and shares 90% of the capital appreciation upon exit.

According to the plan of CITIC Securities, according to the product deadline, within 3 years, the exit of the products all targets the listing of REITs. After the expiration of 3 years, fund managers will sell them to third parties even though there is a possibility of future listing of REITs The way to sell assets exit. At the same time, CITIC Securities also predicted that the probability of public offering of REITs to the public exit normally exceeds 90%, and that of alternative third-party sales is less than 10%.

This is arguably a REITs product from an operating point of view, but it does not satisfy some of the basic characteristics of mature REITs such as liquidity, asset segregation, and more. CSRC stipulates that the priority and subordinate of CITIC private placement REITs can all be circulated and transferred in the Shenzhen Stock Exchange comprehensive agreement trading platform, and the participants are only institutional investors. There are 3 deals for "Departure Priority" and 6 deals for "Departure Times" since listing.

CITIC's private equity REITs are special in terms of income guarantee. Among the two buildings on their projects, the major tenants are CITIC Securities and CITIC Bank, accounting for more than 90% of the total tenants and the leases agreed to be raised by 6% every two years. In addition, the rent contributed by non-CITIC system tenants in Shenzhen accounted for 6.2% of the total rent. All of Beijing's leases were for CITIC System. This is equivalent to CITIC own assets to do securitization, tenants and their own company, the project is guaranteed quality, but also fully demonstrated its pilot, the actual operation of similar situations almost never happen.

Trust Reits has not yet opened its doors

In the real estate sector, trust companies have been working harder and harder than brokerages, and REITs have been the direction of the trust's turn for the better. Ten years ago, trust companies had the appearance of REITs-like products. At the beginning of 2004, Beijing International Trust has followed the mode of operation of REITs and used the funds of the Trust Plan to purchase the property rights of the first store in France Auchan Tianjin. The trust income is derived from the rental income of the properties. At the same time, investors can enjoy property appreciation and project listing Circulation and other potential benefits.

At present, the real estate trust business with equity and debt forms of investment for the development and construction enterprises to provide financing, mostly residential and commercial projects, rarely involved in commercial properties. Existing business exit path is clear, the trust eventually get the principal and proceeds from the sales repayments, while the commercial property has no exit mechanism. Real estate development usually has a cycle, while property is a long-term management process that requires substantial financial support. As a result, the liquidity of funds becomes so important that it is hard to complete without capital injection. In addition, the domestic low rate of return on property is also a consensus, the domestic commercial property rental prices and investment purchase price does not match the bubble is relatively large, the existing property operations are not perfect enough, the future impact of Internet consumption, the market demand Fall expectation.

However, these problems can not seem to be changed in the short term. The value of basic assets is not enough. There is no profit advantage for fixed-income products in the market and their attractiveness to investors is too low. If REITs are liberalized, the problem will naturally resolve as the market environment changes. Before the financial crisis in 2008, the CBRC took the lead in research programs. However, after the crisis, the new real estate control policies were promulgated and the actions promoted by REITs stopped.

Waiting for the regulatory market

The first pilot in the brokerage mainly due to the promotion of the Commission, but in real estate, the advantages of trust non-securities and funds to catch up within a short period of time. Trust short board in the product structure design professional degree, as well as fund-raising ability. 2-3 years is the more common expectation for the opening of the cemetery REITs. However, this opening is in the securities market. There is a span of trust to the securities market, depending on the policy when it comes out. If you can not directly set up the product, you need to use the platform. The platform could be brokerage or private placement, and the issuance of corporate projects involving brokerages among the participating companies in the trust may be smoother.

Compared to the trust, brokers have obvious financial advantages, the sales department is full of brokers have enough customer base, with the trust in the product sales side of the layout, this situation or will be improved. In addition, for the trust, the trust property registration system is also one of the constraints, which is the conditions for asset segregation; a while ago due to the lack of trust property registration system caused by the custody of the trust company bank was frozen, but also remind the industry The urgency of establishing trust registration system. At the same time, the rapid development of foreign REITs benefited from the tax concessions, and the tax bonus of the trust model in the country is still not reflected in the present.

Macro situation

Li Keqiang: Davos Forum speech push 3 key reforms

2014 Summer Davos Forum was held in Tianjin on September 10-12. Premier Li Keqiang delivered a speech at the opening ceremony and proposed three key reform directions: First, continue to start from the government's own revolution and further simplify the administration Decentralization of power, deepen fiscal and tax reforms, promote the reform of the budget management system, so that fair and effective use of public funds. Second, we will continue to focus on cracking deeper structural contradictions and further increasing the effective supply of public goods so as to drive effective demand, make up for shortages in investment, expand household consumption and expand new areas of growth. Third, continue to make full use of and activate the increment and stock of financial finance, and further increase support for the real economy, emerging industries and emerging industries and more benefit the agriculture, rural areas and farmers, small and micro enterprises and service industries.

Development and Reform Commission: Release "Catalog of Encouraged Industries in the Western Region"

Recently, the National Development and Reform Commission released the "Catalog of Encouraged Industries in the Western Region" and is scheduled to come into force on October 1, 2014. Industries entering the catalog will be subject to corporate income tax at a rate of 15%, whereas the current statutory tax rate of corporate income tax is 25%. The scope of the western development includes Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Inner Mongolia and 12 provinces and cities in Guangxi. Key industries encouraged by the Catalog include the construction and operation of solar power generation systems, the construction and operation of wind farms, the repair and assembly of urban railways and subway vehicles, and so on. In addition, industrial waste heat, residual pressure, pressure, gas utilization technology development and application in Chongqing, Yunnan, Guangxi, Qinghai and other industries to encourage listed categories also listed.

Bureau: August CPI rose 2.0%, PPI fell 1.2%

September 11, Bureau of Statistics released in August CPI and PPI data. In August the national consumer price index rose 2.0%. Among them, the city rose 2.0%, 1.9% in rural areas; food prices rose 3.0%, non-food prices rose 1.5%; consumer prices rose 1.8%, service prices rose 2.4%. From January to August, the national consumer price index rose by 2.2% over the same period of last year. Meanwhile, the producer price index of the country's industrial producers dropped 1.2% YoY in August, down 0.2% MoM. Among them, the purchase price of industrial producers decreased by 1.4% from the same period of last year and decreased by 0.1% compared with the previous month. From January to August, the producer prices of industrial producers dropped 1.6% YoY and the purchase price of industrial producers dropped 1.8% YoY.

Comments: Ex-factory prices of industrial producers in August were both slightly higher than the same period last year, mainly due to a rise in prices of crude oil and refined oil products. The prices of major industrial products such as coal, steel and cement are still in a downward trend. The data show that the overcapacity in some industries still exerts pressure on the price of industrial products. The supply and demand in the industrial products market is still not optimistic.

Central Bank: net withdrawn 5 billion yuan this week

The central bank open market on Thursday to 10 billion 14-day repurchase operation, the open market on the day there are 10 billion 14-day repurchase expires; open market on Tuesday conducted a repurchase of 150 million 14 days, the day to achieve a return of 5 billion . 20 billion yuan repurchase due this week, no central voting and reverse repurchase due. Based on this projection, net withdrawn 5 billion this week, the net return for the first time since the 4-week release.

Industry News

Bank of Communications Trust: the first single rental asset securitization ice

September 9, BOCOM Trust announced that it will issue September 14 to issue the first tranche of 2014 leasing asset-backed securities, the issue size of about 1.012 billion yuan. Current issue of A-share asset-backed securities 805 million yuan, the first B-class issue size of 90 million yuan, the sub-file issue size of about 117 million yuan, BOCOM leasing as the sponsor will hold all the sub-file issue size, The rest by the Bank of trust to the tender method, in the national inter-bank bond market public offering. The pooling assets of the transaction were 15 rents paid by the lessees to the Bank of Communications for lease, which are mainly distributed in the road transportation, civil engineering construction, water production and supply, and water transportation. In respect of asset ratings, CCRE has given AAA and AA- respectively the ratings of Priority A and Priority B under the Asset Backed Notes for the current period. The credit ratings granted to China Debts are AAA and A + respectively. Secondary files are not rated.

Trust fund management approach to seek advice

Recently, the regulators issued the Measures for the Administration of China's Trust Funds for Protection (Draft for Comment), stating that China Trust Fund for Social Security will be established to take charge of fund raising, management and use. Funds for the fund come from the list of trust companies Domestic and foreign assets balance subscription and the provisions of the other four ways, the fund will be mainly used for the restructuring of trust companies and short-term liquidity relief. For the part of the subscription fund, the document initially proposed that the trust company subscribe for 1% of the net assets, subscribe for 1% of the new issuance amount of the trust fund, and subscribe for the property trust according to a certain percentage of its revenue, as specified in the specific measures. The document stipulates that the use of funds should follow the principle of emergency rescue and paid use of funds and is mainly used for the restructuring of trust companies and short-term liquidity relief.

Comments: This rule may make the unspoken rules that a trust company rigidly encroach upon become an optional business strategy. After the project is out of risk, the trust company can not only insist on "the buyer conceited" under the premise of "seller is responsible" , You can also choose to pay rigidly, in the latter case, if the trust company's own liquidity tightening, you can apply for protection of the Fund, to a certain cost to avoid reputational risk.

CITIC Trust to promote Yinchuan first batch of rural land transfer trust

At present, Helan County, Yinchuan City and CITIC Trust Company have signed the strategic cooperation framework agreement. The first rural land trust transfer area of ​​13,845 acres, involving 1301 households in 4 villages. Yinchuan City, rural areas have fully carried out the right to contract and manage the right to register the work, the confirmation of the right to confirm the area of ​​143.5 hectares, the cumulative flow of land contractual management area of ​​528,100 mu, accounting for rural household contracted land area of ​​51.6% 69,000 households involved in farmers.

Shanghai Pudong Development Bank acquisition of Shanghai Trust entered a phase of exhaustion

Recently, Ji Guangheng, vice president of Shanghai Pudong Development Bank, said that the Shanghai Pudong Development Bank's acquisition of Shanghai Trust is under preparation. At this stage, due diligence work is underway and the specific integration stage can be entered into after the approval of the State Council. The existing financial leasing companies of Shanghai Pudong Development Group, Shanghai Pudong Development AXA, Pudong Silicon Valley Bank, Hua Yi Bank and 25 rural banks will further consolidate their financial operations through the integration of financial institutions.

Trust companies invest in the stock market: the preferred chemical and chemical industry communications

According to Wind statistics, as of the end of the second quarter of this year, 42 trust companies appeared in the list of the top-10 shareholders of circulation of 182 shares, a decrease of 29 stocks from the end of the previous quarter. Trust companies in the second quarter have additional positions - a total of 5.84 billion shares held by listed companies, an increase of 170 million shares over the end of the quarter, the total market value of shares increased 43.698 million yuan. The data show that the trust company's shares are mainly concentrated in chemical raw materials and chemical products manufacturing, electrical machinery and equipment manufacturing, real estate, computer, communications and other electronic equipment manufacturing, special equipment manufacturing and capital markets services.

China Railway Trust: The trust industry should actively expand its equity investment business

Recently, Chen Chi, deputy general manager of China Railway Trust, issued a statement in the Economic Daily that pointed out that the trust industry should actively expand its equity investment business. As for the equity investment in the project, the trust company can change the real estate trust mode currently dominated by debt financing, cooperate with outstanding developers, invest shares into carefully selected project companies, and jointly manage and share risks. In terms of private equity investment, Ping An Innovative Capital, a PE subsidiary of Ping An Trust, has over 50 equity projects in non-listed companies. Zhongrong Trust and Hunan Trust also set up PE subsidiaries. In M & A investment, since last year, China has successively released a series of policies to support mergers and acquisitions, which will lead to a new wave of mergers and acquisitions. Trust companies can participate in mergers and acquisitions through equity investments.

Present: Kunlun Trust Co., Ltd. shareholders, directors, supervisors and senior management

Distribution: CNPC Asset Management Co., Ltd., Kunlun Trust Co., Ltd. departments

Editor: And Jin to feed: Lin Yin proof: Lin Yin

Tel: 010-63597713 Post Code: 100033 Address: Beijing Financial Street, No. 1 Jinyaguang Building, Room 716, Block B

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