2024-01-25 10:49:00
China News Service, Beijing, January 25th: Title: New policy for operating property loans introduced, real estate companies welcome heavy policy support
China News Service reporter Pang Wuji
On the evening of the 24th, the People’s Bank of China and the State Administration of Financial Supervision jointly issued the “Notice on Proper Management of Operating Property Loans”, which details the requirements for commercial bank operating loan business management standards, terms, quotas, purposes and other requirements. It is clarified that before the end of 2024, for real estate development companies with standardized operations and good development prospects, national commercial banks can issue operating property loans to repay the existing real estate fields of real estate development companies and their group holding companies (including consolidated subsidiaries) related loans and open market bonds.
Industry experts believe that after the new policy is implemented, real estate companies can improve their liquidity through operating property loans. At the same time, it will help revitalize existing properties and change the development logic of the industry to a certain extent. Mainly reflected in three aspects:
First, prevent and resolve risks in the real estate industry.
Pang Ming, chief economist and director of the research department of Jones Lang LaSalle Greater China, told a reporter from China News Service that the new policy was introduced to support high-quality and compliant real estate companies by revitalizing the stock of commercial real estate and operating properties with good comprehensive benefits. Assets, improve liquidity conditions, increase financing channels, expand the scope of fund use, better and equally meet the reasonable financing needs of high-quality real estate enterprises of different ownerships, and accelerate the market-based clearing of real estate enterprise risks in a smooth and orderly manner.
Pang Ming said that this new policy will better connect “asset activation” with “liability continuation”, “equity supplement” and “expected improvement” to help real estate companies with temporary difficulties enhance their credit and prevent and resolve risks.
Xu Yuejin, deputy director of research at China Index Research Institute, also said that after the implementation of the new policy, real estate companies can further revitalize existing assets, improve their own liquidity through operating property loans, optimize debt structure, and reduce short-term debt repayment pressure. He also reminded that real estate companies usually use existing operating properties as underlying assets for related financing, such as CMBS (commercial real estate mortgage-backed securities), REITs (real estate investment trusts), etc. Next, operating property loans may be used more often to replace existing debt.
Second, promote the revitalization and value discovery of existing assets.
Operating property loans have long cycles, relatively low interest rates, and are widely used. The growth of operating property loans will promote the revitalization and value discovery of existing assets. Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Institute of Urban Planning, said that real estate companies with stable operations and long-term holdings of operating real estate will be the first to welcome the benefits.
According to the new policy, in addition to being used for operating capital needs related to the property itself, replacing loans formed by construction and purchase of properties, and shareholder borrowings, operating property loans this year can also be used to replace existing debt. Li Yujia said that the term of operating property loans generally does not exceed 10 years, and the longest period cannot exceed 15 years, which is much longer than the three-year cycle of development loans; for properties with good cash flow, the interest rates will also be relatively low. This will force development companies to pay attention to existing assets and increase operations to maximize the operating value of existing properties.
Yan Yuejin, research director of E-House Research Institute, said that this time, enterprises or operators including commercial complexes, shopping malls, business centers, office buildings, hotels, cultural tourism real estate projects, etc. can enjoy policy support, which is a typical “first arrow.” The expanded version is beneficial to the active and healthy development of the commercial and office market.
Third, change the previous logic of real estate-related loan issuance and risk control.
Li Yujia believes that after the introduction of the new policy, the operation and risk control logic of commercial banks that simply relied on the increase in the market value of collateral to safeguard bank claims will change. The New Deal requires commercial banks to comprehensively determine the operating property loan limit based on the operating conditions and appraised value of the loaned properties, as well as the solvency, credit status, guarantee methods and other factors of the borrower and its group companies; based on the operating income of the loaned properties themselves as the first source of repayment.
He believes that this will help solve the information asymmetry between real estate companies and banks and help screen out the “white list” of real estate companies. Of course, this requires commercial banks to have the ability to judge the market prospects and cash flow of operating properties, which will be a huge test for the banks. But if this can be achieved, operating property loans will experience massive growth, which will be conducive to the prevention and control of real estate risks. (over)
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