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On May 9, Shenzhen Stock Exchange (hereinafter as “SZSE”) approved the Talent Rental Housing Asset-backed Special Plan (hereinafter as the “SCGC Talent Housing Special Plan”) to be jointly launched by Shenzhen Capital Group and Shenzhen Talents Housing Group. As the nation’s first Talent Rental Housing REITs (short for “Real Estate Investment Trust”), the plan is a mile stone of SZSE’s efforts to implement the guiding principle of the 19th CPC National Congress to “speed up the construction of a multi-channel housing system with housing supplies from multiple parties and that encourages both housing rental and purchases”, and an important innovation to implement the Notice on Pushing Forward Relevant Work on Securitization of Rental Housing Assets as issued by China Securities Regulatory Commission (hereinafter as “CSRC”) and Ministry of Housing and Urban-Rural Development of PRC.
The SCGC Talent Housing Special Plan was established by general coordinator Shenzhen Capital Group Real Estate Fund Management (Shenzhen) Co., Ltd., in the amount of CNY 20 billion for shelf offerings, backed by underlying properties which are the talent rental housing in Shenzhen held by Shenzhen Talents Housing Group Co., Ltd. (hereinafter as “Shenzhen Talents Housing Group”). The first tranche of the plan will be issued in the amount of CNY3.1 billion, with a duration of 19 years. Shenzhen Talents Housing Group provides credit support for the special plan, with both the Class A and Class B of the securities receiving AAA credit rating.
As pinpointed in the 19th CPC National Congress, talented people are strategic resources for achieving national rejuvenation and gaining the initiative in international competitions. The introduction of capital via financial innovations is of great significance in that it helps push forward the construction of rental housing for talent and settle their troubles. Wholly state-owned, Shenzhen Talents Housing Group is responsible for investment in, and construction and operation of affordable housing in Shenzhen. The properties underlying the special plan are allocated and rented by Shenzhen housing security authorities and managed and operated by Shenzhen Talents Housing Group. The underlying asset pool of the first tranche of the plan consists solely of housing purchased from the market. The talent housing policies in Shenzhen benefit extraordinary personnel, talent newly introduced into Shenzhen, and outstanding professionals who are able to enjoy the quality apartments that are newly-delivered, well furnished and well located. The SCGC Talent Housing Special Plan has revitalized the quality assets in stock, fully leveraged social capital, and balanced the asset-light and asset-heavy development. It is also an exploration of the mode of sustainable development, and serves as an example for securitization of public rental housing assets and REITs pilot projects in China.
In accordance with the guiding principles of the 19th CPC National Congress and the Central Economic Work Conference, and guided by CSRC, SZSE shall gradually increase its efforts to innovate and develop fixed-income business and products, provide financial support for housing rental, affordable housing and infrastructure projects and other important sectors by leveraging such instruments as asset-backed securities, REITs and corporate bonds, and continue to push through and improve a long-term mechanism for the steady and sound development of the real estate market.
