YINTAI

Editor's note: Recently, The Paper interviewed Shen Guojun, member of the CPPCC National Committee and founder and chairman of Yintai Group, and published a report entitled "Yintai Shen Guojun: The time is ripe for including quality commercial real estate into the pilot public offering of REITs". See the full text below.

During the two sessions, Shen Guojun, member of the National Committee of the Chinese People's Political Consultative Conference and founder and chairman of Yintai group, submitted three proposals on commercial real estate securitization, systematic marine reserve construction, and digital technology application in court case.

“The time is ripe for accelerating commercial real estate securitization.” In a written interview with The Paper, Shen Guojun advised launching a pilot program for the public offering of REITs with well-run commercial real estate as the underlying asset, and said that he was bullish about the high-quality development of the commercial real estate sector going forward. Quality real estate in core positions would have enormous potential for continuous value gain in the future.

Operational and management innovation as well as asset securitization would become the two general industry development trends. Shen believed that under the present macro policy directive of “switching from old to new growth drivers and promoting high-quality development”, commercial real estate was in the process of transforming from the production and sales model of the past to an “asset management & operational” model.

With COVID-19 prevention and control becoming normal, operational and management capabilities would become increasingly important to commercial real estate development. Shen said that COVID-19 has indeed had a significant impact on many commercial complexes that lacked innovative operational and management capabilities, which have chosen to lower rents to resist risks. Large shopping centers, meanwhile, have been able to provide comprehensive closed-loop services by way of innovative operational and management practices such as online promotions, livestream selling and pursuing the night market economy, among others.

“The concept that residential property is for ‘owner occupation rather than for speculation’ has meant that an enormous stock of quality assets built up in the commercial real estate sector could not be securitized so that a virtuous circulation of capital may be achieved.” Therefore, in the Proposal for Accelerating Commercial Real Estate Securitization so as to Contribute to Promoting Domestic Demand and Stabilizing Employment, Shen advised accelerating the inclusion of commercial real estate into the expanded pilot program for the public offering of infrastructure REITs.

Meanwhile, Shen felt that legislation for REITs should be enhanced as soon as possible. The class and attribute of investable financial assets of a similar nature in REITs should be clarified, and the lines of responsibilities of fund managers and operating managers should be distinctly delineated. He also advised improving supporting tax policies relevant to REITs from the perspectives of land VAT, stamp duties and income tax.