Risk Management of Affordable Rental Housing REITs: A Case Study of CICC Xiamen Anju

DOI

10.2991/978-94-6463-570-6_30How to use a DOI?

Keywords

Affordable Rental Housing; REITs; Risk Management; Occupancy Rate; Discount Rate

Abstract

With national policy advocacy and market evolution, the rental housing market has become a focal point. Cities are planning investment and construction for affordable rental housing to address housing issues by attracting talent and promoting economic development. However, the operation of such housing faces challenges like large investments and long payback periods, making local government funding inefficient. Real Estate Investment Trusts (REITs) are emerging as an innovative financing tool with potential for funding these projects and activating quality assets. This article examines the “CICC Xiamen Anju Affordable Rental Housing REITs” case, detailing the project’s issuance, participants, and transaction structure, including underlying assets and original equity holders. Using literature research, case analysis, and Monte Carlo simulation, the study focuses on three risk points: rent growth rate, occupancy rate, and discount rate. Regression analysis of Xiamen’s housing prices, rents, and urban residents’ disposable income shows that rent changes are related to housing prices and income. Oracle Crystal Ball software is used to fit the occupancy rate and rent growth rate distributions, and Monte Carlo simulation evaluates the underlying assets. Sensitivity analysis indicates that the discount rate is the most sensitive factor, followed by rent growth rate and occupancy rate. The article recommends risk control measures for affordable rental housing REITs: Local governments should set reasonable rent standards based on market conditions to balance social welfare and investment returns. Improving the tax system for infrastructure REITs and enhancing incentive mechanisms are also necessary. Strengthening information disclosure by issuers and underwriters ensures that investors receive accurate, comprehensive information on the financial and operational status, market prospects, and potential risks of REITs projects.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Zhenbo Tian
AU  - Xianghua Wu
AU  - Xiaomu Zhang
PY  - 2024
DA  - 2024/11/22
TI  - Risk Management of Affordable Rental Housing REITs: A Case Study of CICC Xiamen Anju
BT  - Proceedings of the 2024 5th International Conference on Management Science and Engineering Management (ICMSEM 2024)
PB  - Atlantis Press
SP  - 281
EP  - 296
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-570-6_30
DO  - 10.2991/978-94-6463-570-6_30
ID  - Tian2024
ER  -