The concept of financing and how it works

The Financing of commercial real estate mainly refers to equity financing and debt financing during the project development period. Commercial real estate capital operation refers to the investment decision-making process of the project from the beginning. Investors in order to solve the project construction funds, operating funds, Brand development funds and comprehensive financial operations based on the capital market to achieve investors' investment returns. For commercial real estate, funding issues will determine the success or failure of the project. If there is a problem in the funding chain, the project will face a serious threat. Therefore, it is crucial to build a good late-stage funding platform before the project is operated. Therefore, financing and capital platforms are of extremely important significance to commercial real estate. 1: Private financing during project construction period Commercial real estate determines financing plans according to different needs during the construction period and operation period. The construction period is mainly private financing, and the operation period is mainly capital operation. The construction period is mainly to solve the shortage of project start-up funds. If it does not reach 30% of the total project investment, then the funding gap must be solved through financing. The financing objects can choose international large-scale commercial real estate developers, operators, and domestic first-class real estate developers. Businesses, large retailers, strategic investors, etc., when determining financing goals, must make sufficient judgments on their own capital situation, determine feasible financing plans based on reality, and set a reasonable equity structure. 2: Capital operation during the project operation period. Private equity financing is only a short-term financing plan for commercial real estate. In order to achieve sustainable development, capital operation must be carried out. As we all know, the characteristics of large and medium-sized commercial real estate are large investment scale, long payback period, large cash flow, etc. It can be seen that commercial real estate projects must rely on the capital market for survival and development. In the early stages of project operation, large commercial real estate projects should complete the construction of the internal platform required by the capital market before private equity financing. The so-called internal platform mainly refers to the commercial real estate project company’s A listed company participates in the launch or an overseas enterprise controls the project company for overseas listing. At the same time, the internal platform construction must consider the operational feasibility of domestic and foreign capital markets. Since the current domestic capital market has not effectively realized real estate securitization, the domestic capital market has certain limitations. However, foreign capital markets have fully realized real estate securitization, so it is feasible to effectively build an international platform.