2004 Real Estate Financing To Create New Strategies

For the real estate industry, land and capital are two legs supporting the whole body.

However, in June last year, the announcement of the central bank's notice on Further Strengthening the management of real estate credit business (short document No. 121) suddenly made the shortage of capital leg blood supply, resulting in the risk of falling or even falling down completely.

Analysts pointed out that, for many years, the development funds of real estate enterprises mainly consist of 4 parts, namely, their own funds, bank loans, construction enterprises' advance and advance sales.

In addition to 20% of bank loans, there are quite a lot of bank loans in advance and pre sale of construction companies.

The three additivity estimates that bank loans account for nearly 60% of the total amount of real estate development funds, that is, more than 60% of China's real estate development funds come from bank credit.

According to industry sources, Beijing developers rely more than 90% on bank credit funds, but not all developers can achieve a virtuous circle of capital.

Although the document No. 18 of the State Council has made clear positioning for the long-standing real estate industry to make the "pillar industry of the national economy", and highly appraised its status quo and future "sustained and healthy development", the power of Document No. 121 has been highlighted.

As a result, when the domestic financial market is not fully open, whether the real estate industry can rebuild its own financing platform has become a top priority.

Since the issuance of central bank document No. 121, the field of real estate financing has been flourishing in theory. In practice, enterprises have mainly relied on bank loans, listing, overseas financing, corporate bonds, equity financing, real estate trusts and so on.

Nie Meisheng, President of the National Federation of industry and commerce housing industry association, believes that real estate financial capital will be the primary concern of the real estate industry this year.

Commenting: seven weapons of real estate financing: Dr. Hua Wei, deputy director of Fudan real estate research center, said: "under the present circumstances, developers will be financiers."

Entering the 2004, the "real estate financing year" predicted by academic circles is beginning to see.

The real estate trust is in the lead and is hot; the industrial fund is crying out all the time, secretly starting; listing and financing are eagerly looking forward to fighting for the single log bridge; overseas funds are covetously eyeing, and the wind and rain are coming, 2004, the real estate financing is thrived.

Bank Credit: the thin dead camel has two so-called "37 open" practices in the field of international commercial banking nowadays. One is loans to the real estate industry, 30% of the total loans and 70% of the remaining industries. Two is the development loans granted to developers, which account for 30% of the total balance of real estate loans, and 70% of housing mortgage loans and other businesses.

The financial sector also has difficulties.

As Yu Lijie, deputy general manager of China integrity securities assessment Co., said, "low credit is the real reason for developers to raise funds, and low credit means credit risk.

Because of the provisions of the central bank's Document No. 121, the bank loan is tight at the present stage. Its demand for the degree of project development and the developer's own capital is not what most developers can achieve in the short term.

However, for enterprises, bank loans have an irresistible temptation: convenient, relatively low cost, and large financial leverage.

The drawback is that the debt repayment pressure is large, but debt can be circumvented by adjusting the debt structure of long-term debt and short-term debt. At the same time, the real estate credit business is generally regarded as a high-quality asset of banks. Despite the overheated signal issued by the central bank, under the pressure of the five level credit rating and bad debt rate, the commercial banks' credit enthusiasm remains high under the temptation of real interest.

According to the statistics of Shanghai ajian trust, in June of last year, after the promulgation of the central bank's No. 121 document, although the number of real estate trusts increased rapidly, the funds raised in the whole year were less than 7 billion yuan.

According to the data released by the central bank, as of the end of September last year, the national real estate development loan increased by 135 billion yuan.

Bank credit is still the main force in the housing sector, which is beyond doubt.

The real estate trust project financing: the main star's difficult words and hidden secrets, after the central bank issued the No. 121 document in June 13, 2003, the trust suddenly became the new financing hot spot of the real estate industry.

According to incomplete statistics, in 2003, nearly 70 real estate trust projects nationwide, the amount of real estate trust funds has exceeded 5 billion yuan, especially in the fourth quarter, the real estate trust "blowout".

Jing Rui housing industry fund preparatory group chairman Gao Guangyuan believes that the use of real estate trust this way to increase the financing of the real estate market, is a more feasible way.

However, the amount of trust funds is far from enough to support the industry. Why is it so popular?

According to industry sources, many trust funds are actually "bridge tolls" borrowed from the trust company before obtaining the bank loan qualification of the Real Estate Company.

There are also deficiencies in real estate trust project financing.

The notice of the people's Bank of China on issues relating to the trust business of trust investment companies (the trust industry calls it Document No. 314) stipulates that each trust scheme is restricted to 200 copies, and from the current supervision and management of the central bank, "it is possible to obtain a trust plan only if the real estate projects such as economically affordable housing are relatively strong."

In addition, such a highly centralized and relatively "closed" investment plan, if halfway because of the risk of the project and choose to quit, it is difficult to find the next family willing to take over.

A research report recently completed by the people's Bank of China Research Bureau proposed that the real estate trust should be pformed into a real estate trust.

It seems that with the support of policy, although the real estate trust financing is a bit "overrated", the future of the 2004 Main stars is still clear.

Overseas Property Fund: will foreign monks chant scriptures?

With the development of Shanghai towards the international financial and business center, foreign real estate funds are optimistic about Shanghai's real estate market.

Morgan Stanley's real estate investment fund RSREF, Holland international real estate, Ruian group and Singapore garde land have launched.

However, Hua Wei, deputy director of the real estate research center of the Financial Research Institute of Fudan University, said: "overseas funds have great prospects, but they are hard to understand."

At present, the vast majority of international capital is concentrated on the fund, while China's current laws and regulations do not have a clear basis, so foreign capital mostly borrows from financial management companies and investment companies.

In addition to policy and legal barriers, the non-standard operation of domestic enterprises and the opacity of the real estate market are also major obstacles.

There is no doubt that the real estate industry has a strong appeal to private equity funds.

However, the absence of the law of the industry fund is a danger that no one dares to overlook.

These funds can only exist in the form of financial management companies, investment companies, and so on.

The unlisted equity financing of the company is that it can not afford to invest in a wolf, but it can enrich its own capital. However, the general real estate enterprise has less capital in its registered capital and will not easily sell the holding status. It will not be willing to surrender most of the development proceeds. Therefore, it is facing the dilemma of "having children or having a wolf skin".

Listing is a luxury capital feast. Listing is one of the main ways for enterprises to obtain capital and implement capital operation. It is also a good effect of brand upgrading.

For example, Li Jiacheng's Cheung Kong estate has reached 100 billion of its net assets since its listing in 1972 to 2000. Real estate developers certainly hope and strive to go that way.

Especially in 2002, there were more than 20 mergers and acquisitions of real estate companies in the country, buying shares and entering the stock market through equity financing, and directly financing in the capital market.

Li Mingliang, an associate professor of Shanghai Jiao Tong University and a securities law expert of the company, said: "real estate enterprises have the necessity and possibility of issuing and listing financing. However, the listing of real estate enterprises in China is mainly influenced by industrial policies. Considering financial safety, there may be obstacles in the process of listing.

The China Securities Regulatory Commission (CSRC) in the notice on further standardizing the initial issuance and listing of stocks stipulates: "since January 1, 2004, in addition to the overall restructuring of state-owned enterprises, the overall change of the limited liability companies and the exemption from the State Council, the companies must be established for 3 years before they can apply for the initial listing. At the same time, in order to make the issuer's profits in the last 3 years comparable, there is no significant change in the business and management of the issuer in the past 3 years, and the actual controller has not changed."

I'm afraid most Real Estate Company fail to meet this requirement.

Experts in the investment banking industry admitted that the capital market is not too optimistic about the real estate industry. The real estate development project itself has a long period of investment recovery, uneven cash flow, and large performance changes. It often presents a disadvantage in the stock market.

The new listing rules seem to have eased the listing restrictions, but brokers and other intermediaries will take full responsibility and limit the operation of the black box.

In the face of the new rules, developers who are really strong and well behaved can go on the market smoothly. In the current situation of too many developers and low credit level, it seems unrealistic to solve the shortage of industrial funds through large-scale listing.

Luxury capital feast, tickets are hard to find.

According to the company law, the main body of issuing bonds is strict. Only limited liability companies established by wholly state-owned companies, listed companies and two state-owned investment entities are eligible for issuance, and there are strict restrictions on the assets and liabilities ratio, capital and guarantee of enterprises. In addition, the relative scale of China's bond market is relatively small, and the risks of issuing and holding are relatively large.

Long term bonds also face greater interest rate risk and lack of risk aversion financial instruments.

This is destined for most real estate companies to issue bonds.

Rethinking: the system is fast setting up, and companies are good at singing opera.

But this is largely a bubble generated by the squeeze of Document No. 121.

Seemingly dazzling, but lack of solid institutional support.

It is becoming a common understanding that "the system is quickly set up, and enterprises are good at singing opera".

First, the industry fund law should be promulgated as soon as possible to end the dilemma that the real estate fund can not rely on, so as to stabilize a standardized and huge financing market for the real estate industry.

Secondly, under the framework of the current company law and the securities law, since a large number of listed companies are not possible, the second board market can be opened up.

Fan Fuchun, vice chairman of the China Securities Regulatory Commission, said in Shenzhen earlier this year that the SME board would be set up in the capital market to solve the problem of financing for SMEs in China.

The establishment of the second board market may bring a little surprise to the developers. However, this new investment market may also induce some of the profit seeking funds to withdraw from the real estate investment market, and objectively, it can also speed up the pace of survival of the fittest in the real estate industry.

Once again, the legal system of real estate securitization is built to lay the foundation for the real introduction of the REIT property rights trust.

Feng Lun, the boss of Wantong real estate, first proposed that after the initial stage of development, China's real estate enterprises will move from the Hongkong model of all-round development to the professional mode of operation of the United States.

REIT is precisely a high level real estate development mode supported by sophisticated legal system.

Finally, the central bank's monetary tightening has its own considerations, but it should not be choking off.

In the use of credit control measures, we should establish a sound and overall institutional basis.

Mr. Ren Zhiqiang recommended that the use of capital capability will become the core of the developer's competition.

The white paper on the development of capital market by the State Council, resolutely further promoting the reform and opening up of the capital market, shows that when the Chinese economy enters a period of high growth, the support for the development of enterprises lies in who can have more development funds and who can attract more capital for their own use through integration with the capital market.

In fact, the fundamental way to solve the problem is to find the source of high quality capital, namely, the innovation of investment and financing direction and the integration of financing channels.

The amount of real estate financing is huge. Relying solely on bank loans or other ways can not completely solve the problem, and the need for financial products innovation portfolio.

Zhang Xiaojin, general manager of Weiye Asset Management Co, believes that enterprises should flexibly apply their own capital plus bank loans, equity financing + bank loans, self owned funds + institutional investors, self owned funds + class funds, self financing + trust scheme entrusted loans according to their own characteristics.

More experts pointed out that trust is a chain of financial workers.