New Regulatory Measures Promote Normalized Issuance of Publicly Offered REITs in China

The normalized issuance of publicly offered REITs welcomes new regulatory measures. On the evening of May 12, the China Securities Regulatory Commission stated that it would guide stock exchanges to revise the guidelines for REITs audit concerns, and improve the key points of REITs asset audits and information disclosure requirements; He also stated that a symposium on the public offering REITs business has been held recently to exchange and discuss topics such as low-price competition in the public offering REITs market, improving the internal control system for project quotations for managers and financial consultants, and advocating fair competition to promote the healthy development of the industry.

Experts interviewed by the reporter of “Securities Daily” said that regulators should further optimize REITs review concerns, strengthen information disclosure requirements, and China Foundation Association and participating institutions jointly promote the rationalization of REITs industry project quotation levels, all of which are effective ways to steadily realize the normalization of REITs issuance , which is conducive to promoting the high-quality development of the REITs market.

Refinement of two major categories of asset review points

and disclosure requirements

According to the China Securities Regulatory Commission, combined with the industry characteristics of industrial parks, toll roads and other major categories of assets, on the basis of the current review and information disclosure requirements of REITs, the two categories of assets have been refined from multiple dimensions such as project compliance, historical operations and evaluation parameter settings. The key points of review, strengthen information disclosure requirements, and improve the accuracy and efficiency of supervision.

Judging from the 27 listed REITs and 2 approved REITs projects, industrial parks and toll roads are the two underlying asset types of REITs with the largest number and scale of issuance, occupying an important position in the current market.

The relevant person in charge of CICC Fund Management Co., Ltd. (hereinafter referred to as “CICC Fund”) told the “Securities Daily” reporter that by refining the review focus of the two major types of assets and strengthening the requirements for information disclosure, investors will be better protected legally. On the basis of equity and long-term investment acquisition, improving the efficiency and quality of REITs business execution will help the original stakeholders, fund managers and various market players to reach a business consensus, promote the normalization of public offering REITs, and help the market Long-term, steady and high-quality development.

Combined with the situation of the primary and secondary markets, Sun Guiping, a senior fund analyst at the Shanghai Securities Fund Evaluation Research Center, analyzed to the “Securities Daily” reporter that the implementation of the above guidelines will help promote the entry of high-quality assets into the REITs market, and further increase the number of REITs issued and the market size. , especially in terms of asset evaluation and pricing, will be more reasonable, which is expected to reduce the price fluctuations of REITs in the initial stage of listing, and increase investors’ enthusiasm for long-term holding of REITs. At the same time, improving information disclosure requirements will increase the symmetry of REITs information, further improve the pricing efficiency of the secondary market, and the long-term performance of REITs may be significantly differentiated.

“In the future, fund managers will be more predictable in the selection of the above two types of assets, and will focus on or disclose the review points during due diligence and information disclosure. At the same time, for other types of assets, they will also refer to Implementation. According to the characteristics of different industries, refine the investment standards and improve the operation and management related matters during the duration.” The relevant person in charge of the Real Estate Investment Department of AVIC Fund Management Co., Ltd. (hereinafter referred to as “AVIC Fund”) said in an interview with a reporter from the Securities Daily .

REITs issuance efficiency

or further enhance

The China Securities Regulatory Commission stated that it will guide the stock exchange to continue to improve the rules of the REITs information disclosure system, study and formulate the disclosure guidelines for regular reports and temporary announcements, and gradually introduce warehousing logistics and affordable rental housing in accordance with the principle of “maturing one category and launching one category”. Establish and improve transparent and predictable review and registration standards, focus on asset and project operation quality, further strengthen market supervision and investor protection mechanisms, and better serve high-quality economic development.

The relevant person in charge of CICC Fund said that this shows that the REITs business of different asset types has gradually matured in the pilot program, and can further build consensus and improve efficiency through asset review and information disclosure rules, laying a good foundation for promoting the normalization of REITs issuance.

Specific to large categories of assets such as warehousing and logistics, affordable rental housing, etc., the relevant person in charge of the Real Estate Investment Department of AVIC Fund believes that the two types of assets belong to the direction of the national industrial policy, and it is in line with the policy to promote the development of such industries through REITs. . At the same time, judging from the warehousing logistics and affordable rental housing REITs products that have been listed, the underlying assets have stable operations and excellent performance, and are sought after by investors in the secondary market. In this context, the introduction of warehousing logistics, affordable rental housing and other major asset review and information disclosure rules will help promote the issuance and listing of more REITs projects and optimize the industry structure of the REITs sector.

“As an innovative financial product, the underlying assets involved in REITs are quite different, and the gradual promotion of asset types is a relatively safe and effective way to realize the normalization of REITs issuance and promote the long-term healthy development of the REITs market.” Sun Guiping predicts that the future efficiency of REITs issuance will will be further improved, and the market size will expand rapidly.

Standardize the existing quotation level of the project

Curb the trend of low-price competition

At the above-mentioned public offering REITs business symposium, the Fund Association of China stated that recently, the original stakeholders of some public offering REITs projects simply regard low price as the most important condition for selecting managers and financial advisors in the bidding process, and use “the lowest price gets” or “the lowest price gets” “The one with the lowest quotation gets the highest score” to select managers and financial advisors; even some managers and financial advisors of public offering REITs obtained projects at a price lower than cost during the bidding process, and the income could hardly cover the cost.

“Low-price competition reflects the reduced effectiveness of the issuance market selection mechanism, which puts the original stakeholders of REITs in a relatively strong position, while fund managers and other intermediaries are in a relatively weak position, unable to express opinions objectively and fairly. Low quotations cannot cover issuance costs. This makes it impossible for REITs managers to invest enough resources to fully adjust infrastructure assets, and the risk of projects will increase after listing, which will ultimately damage the interests of investors.” Sun Guiping believes that low-price competition or even “zero-fee” order grabbing, etc. It will have a negative impact on the quality of publicly offered REITs issuance and duration management, and may disappear.

China Foundation Association stated that in the next step, it will go deep into the industry to conduct research on the charging mechanism of public offering REITs, strengthen the guidance and regulation of market participants, and maintain a fair competition order in the market.

The relevant person in charge of CICC stated that the duration management ability is one of the keys to the stable and long-term development of public offering REITs, which requires fund managers and participating institutions to exert their professional capabilities to effectively protect the legitimate rights and interests of holders. By regulating the current quotation level of REITs projects and curbing the trend of low-price competition, it will help fund managers and financial consultants to cover costs more effectively, and continue to improve the duration management capabilities of publicly offered REITs.

According to the person in charge of the real estate investment department of AVIC Fund, reasonable charges are the guarantee of high-quality services and the source of investment income for investors. Regulating the current quotation level of public offering REITs projects is an important part of promoting the normalization of REITs issuance, which can promote fund managers to improve their “internal strength”, so as to give full play to the effectiveness of REITs in serving the high-quality development of the economy.

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