China encourages REIT to accelerate infrastructure investment by Reuters

SHANGHAI (Reuters) – China’s state planner is pushing for a nationwide boost to the country’s real estate investment trust (REITs) market as Beijing seeks to accelerate infrastructure investment.

The National Development and Reform Commission (NDRC) has called on its local offices to increase publicity, cut red tape and improve services so that more infrastructure projects can be listed as REITs, according to a note posted on the agency’s website. Friday.

China launched a public REIT market in Shanghai and Shenzhen in June, enabling infrastructure projects, from tolls to sanitation plants, to be listed as part of an effort to alleviate the debt burden of local governments.

Nine REITs were listed at launch, but only three have been added since then. Analysts say the market faces challenges, including a shortage of quality and profitable projects for the list, as well as legal and tax issues.

The NDRC’s December 29 statement said local offices should tell infrastructure owners how REIT can help them reduce leverage, scare off debt risks and improve efficiency and encourage them to list good projects.

In addition, the NDRC asked its local offices to coordinate more with other government agencies, such as securities and environmental regulators, to expedite the issuance of REITs.

The NDRC said the profits from the REIT lists should be recycled to new projects, and the agency will increase the monitoring of cash flows.

China has promised to increase investment in infrastructure to help the economy.

Chinese regulators say REITs are expanding the financing channel for infrastructure projects, providing more opportunities for investors and helping to reduce China’s macro leverage ratio and scare away financial risks.

Under the pilot scheme, the underlying eligible assets are limited to infrastructure projects and exclude commercial assets such as shopping malls or offices.