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Real estate project financing is an important part of the entire social financing system. It is a financing activity for real estate investors to ensure the smooth progress of investment projects. Like other financing activities, real estate project financing also includes two aspects: fund raising and funding.

Real estate project financing

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Real estate project financing is an important part of the entire social financing system. It is a financing activity for real estate investors to ensure the smooth progress of investment projects. Like other financing activities, real estate project financing also includes two aspects: fund raising and funding.

The essence of real estate project financing is to give full play to the property functions of real estate,

Compared with general enterprises, the financing activities of real estate companies have the following characteristics:

1. There is a large demand for development funds and a high dependence on external financing.

The development of each real estate project is a process involving multiple parties. As far as real estate project financing is concerned, there are nine main participants as follows.
(1)

Project financing generally consists of four basic modules, which are the project's

Since the beginning of the 1950s, project financing has developed rapidly around the world, especially in the past ten years, and has attracted more and more attention and favor, mainly because project financing has some obvious advantages compared with traditional financing methods. Advantages make project financing more suitable for real estate project development and become its future development direction, mainly in the following aspects :.

(1) Analysis of the advantages of real estate project financing

Project-oriented, which helps developers with poor strength and credit status to obtain funds.

In traditional financing methods, lenders value the strength and creditworthiness of developers. And project financing, as the name implies, takes the project as the main body. The loan bank's loan is based on the commercial real estate

At present, the common financing modes for international project financing include: direct arrangements by investors

(1)

Requirements for an enterprise legal person:

(1) Application report authorized by the company's legal person or signed by the board of directors;

(2) Have opened a basic account or a general deposit account;

(3) Provide true and comprehensive (audited) financial statements, reports, financial indicators and

Financing real estate projects

Real estate project financing differs from corporate financing in the following ways:

(1) Creditors have different recourse powers

For corporate financing, creditors have full recourse for debts, that is, when the project's net operating benefits cannot meet the contract's reimbursement or repayment of loan funds, they can recourse to other corporate projects, business income and assets to repay debt. For project financing, the creditor's recourse is limited to the net operating income generated by the project, so it has no recourse or limited recourse for debt.

(II) Different persons responsible for investment risks

For corporate financing, an enterprise's legal person makes investment decisions and assumes decision-making responsibilities, while also bearing investment risks (construction, operation, and repayment risk). For project financing, the sponsor makes investment decisions and naturally assumes responsibility for the decisions, but the project company has to bear investment risks.

(III) Different subjects of project financing and corporate financing

The main body of project financing is an independently established project company, usually a subsidiary of a company, or a joint venture company composed of several companies or institutions taking the project as the object. The main body of corporate financing is the borrowing enterprise.

(IV) Different degrees of diversification of financing risks

For project financing, the financing risk can be shared by all parties involved in the project construction (such as contractors, suppliers, contractors, lenders, and governments), and not by any party in the project. As for corporate financing, fund raising is a basic activity of an enterprise, and all financing risks are borne by the enterprise.

(V) Different funding costs

Project financing involves a wide range and complex structure, and requires a lot of technical work related to risk sharing, tax structure, asset mortgage, etc. Financing documents are often several times more than ordinary corporate financing. Therefore, compared with corporate financing, projects The financing cost of financing is high, and the time required to organize financing is also long.