Securities and futures commission starts! Real estate has been the focus of great benefits.
As one of the important channels of real estate financing, private equity funds have started to invest in real estate, and the scope of investment in real estate is wider than in the past.
On February 20th, the CSRC issued a notice saying that in order to further give play to the advantages of diversified asset allocation and professional investment operation of private equity funds, meet the reasonable financing needs in the real estate sector, and promote the real estate market to revitalize the stock, the CSRC launched the pilot work of private equity investment funds in real estate.
According to the requirements, the investment scope of real estate private equity investment fund includes specific residential buildings (including stock commercial housing, affordable housing, market-oriented rental housing), business premises, infrastructure projects and so on.
The CSRC also indicated that foreign investors are encouraged to invest in real estate private equity investment funds in the form of QFLP (Qualified Foreign Limited Partner).
Later that day, under the guidance of the CSRC, asset management association of china drafted the Guidelines for the Pilot Filing of Real Estate Private Investment Funds (Trial) and officially released it, which further clarified the scope of real estate investment and the pilot requirements for managers.
Zhang Ping, executive director of IFFRE (International Financial Real Estate Alliance) and chairman of BOMA China Research Committee, said that in recent three years, due to the epidemic, economic challenges and market fluctuations, many housing enterprises have been thundered due to the break of capital chain, and financial institutions have been forced to hold assets in debt-for-equity swaps, but they lack the ability to actively manage them, so there have been many special opportunities and countercyclical structural opportunities to buy distressed assets at a discount.
"Last year, the investment in the national block trading market was about 220 billion yuan. It is expected that the activity of real estate investment transactions and the investment in block trading will increase significantly this year, and the real estate investment market will be very active." Zhang Ping said.
"Using private equity funds to revitalize operating real estate will be an important direction of the new development model of real estate. Investors can also allocate real estate through real estate funds. " A private equity fund said that the development opportunity of real estate private equity investment funds has come.
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Private equity fund investment in real estate pilot started
By the end of 2022, there were 838 private equity real estate funds in asset management association of china, with a scale of 404.3 billion yuan; There are 1424 private equity infrastructure funds with a scale of 1.21 trillion yuan, which are mainly invested in commercial real estate, transportation infrastructure, logistics and warehousing, and municipal engineering development and construction.
These products have played an active role in supporting the stable and healthy development of the real estate market, promoting the real estate market to revitalize the stock and transform the development.
However, because the investment scope, investment mode and asset return characteristics of real estate private equity investment funds are quite different from those of traditional equity investment, the CSRC instructed the fund industry association to set up a new category of "real estate private equity investment funds" under the framework of private equity investment funds and adopt differentiated supervision policies.
The CSRC has made it clear that the pilot work is based on the principle of pilot first and steady progress. Private equity investment fund managers who meet certain conditions can raise and set up real estate private equity investment funds in accordance with the pilot requirements to conduct real estate investment pilots.
According to the requirements, the managers of private equity investment funds participating in the pilot work must have stable ownership structure, sound corporate governance and paid-in capital meeting the requirements. The main investors and actual controllers must not be real estate development enterprises and their related parties, have real estate investment management experience and real estate investment professionals, and have not committed any major violations of laws and regulations in the last three years.
The CSRC believes that, considering the characteristics of large-scale and long-term real estate private equity investment funds, investors need to have higher risk identification ability and risk-taking ability, and the first round paid-in investment of investors in pilot fund products is not less than 10 million yuan, mainly institutional investors.
For real estate private investment funds holding more than 75% of the equity of the invested enterprise, a small number of ultra-high net worth natural person investors can be introduced in a limited proportion to prevent stakeholder risks. The total contribution of natural person investors shall not exceed 20% of the paid-in amount of the fund.
The scale of the first round paid-in raised funds of real estate private equity investment funds shall not be less than 30 million yuan, and it can be raised on the premise of meeting certain requirements; At the same time, foreign investors are encouraged to invest in real estate private investment funds by QFLP.
In order to strengthen the risk prevention and control in the field of real estate investment, the policy also makes it clear that private real estate investment funds should be under compulsory custody, and managers are strictly prohibited from using the fund property to invest in enterprises or projects controlled by their actual controllers.
According to the CSRC, private equity fund managers who meet the requirements of the pilot can submit relevant materials to the China Foundation before carrying out business activities such as fund raising and management, carry out pilot projects of real estate private equity investment funds, and file products in accordance with regulations. Private equity investment fund managers who do not participate in the pilot can continue to carry out equity investment business such as affordable housing, commercial real estate and infrastructure in accordance with the relevant self-discipline rules of the Association.
Bai Wenxi, chief economist of IPG China, said that while actively promoting the expansion of the real estate private equity fund pilot to specific commercial housing, promoting real estate financing and promoting the recovery of the real estate industry and the recovery of the market, prudent measures have been taken to steadily promote the real estate private equity fund pilot, such as improving investor access standards, strict supervision, and strengthening industry guidance. This shows that the CSRC has taken a prudent attitude of actively promoting and being cautious and supervising at intervals.
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Revitalize the existing assets of housing enterprises and guarantee the delivery of buildings.
In the past, private equity funds can also invest in the residential market, and once served as an important source of investment and financing for housing enterprises. However, after asset management association of china issued the Record Management Standard No.4 in 2017, the investment of private equity funds in the residential market has been basically restricted.
Last November, at the annual meeting of Financial Street Forum, Yi Huiman, Chairman of China Securities Regulatory Commission expressed the policy attitude that the capital market supports the stable and healthy development of the real estate market.
At that time, when answering a reporter’s question, the spokesman of the CSRC said that it would actively play the role of private equity investment fund in supporting equity financing of real estate enterprises. Piloting private real estate investment funds, allowing qualified private equity fund managers to set up private real estate investment funds, introducing institutional funds, investing in existing residential real estate, commercial real estate and infrastructure, and promoting real estate enterprises to revitalize operating real estate and explore new development models.
Report to the 20th CPC National Congress of the Party also made it clear: "Accelerate the establishment of a housing system with multi-agent supply, multi-channel guarantee and simultaneous rent and purchase."
Now, real estate private equity investment funds came into being. In addition to investing in infrastructure, we can also invest in existing commercial housing, affordable housing, market-oriented rental housing, commercial operation housing and so on.
A real estate securities person said that allowing qualified private equity institutions to set up real estate private equity investment funds, on the one hand, is to solve the problem of the source of funds for "Baojiaolou" and incite social funds to participate through some high-credit funds; On the other hand, it can also introduce new funds for the current residential and commercial real estate, revitalize the stock of operating real estate of housing enterprises, and ease the financial pressure of housing enterprises.
For private equity institutions and domestic and foreign institutional investors, it may mean that the real estate "bargain-hunting" opportunity is coming.
From the international experience, some large and successful private equity institutions often have a considerable proportion of real estate investment projects, which is an important source of their profits. The data shows that Blackstone’s real estate fund business has raised about 25% of Blackstone’s total fundraising since 2016, and the distributable profit accounts for nearly half of Blackstone’s total, which is the "ballast stone" for Blackstone’s scale and profit growth.
Zhang Ping said that the investment strategy of real estate private equity funds mostly depends on the investment preferences of institutional cornerstone financial investors (LP), and their investment preferences are comprehensively determined by the source, nature, term, balance of income and risk.
For example, she said that insurance funds are often the main cornerstones of private real estate funds because of their large amount of funds, capital investment and allocation needs. However, insurance funds cannot be invested in the field of stock commercial housing. It is expected that pre-REITs (public offering REITs front-end link) real estate private investment funds with affordable housing, market-oriented rental housing and infrastructure projects as the underlying assets and stable cash flow will be favored by insurance funds first.
The CSRC also made it clear that "overseas investors are encouraged to invest in real estate private investment funds by QFLP". In Zhang Ping’s view, this indicates the scope and channels of investment targets of overseas institutional investors, which helps to enhance the confidence of overseas LPs.
This article is from: China Real Estate News.
Author: Xu Qian