Case Background

As part of the preliminary preparations for the issuance of REITs, Shenzhen XX Talent Housing Co., Ltd. plans to transfer assets to the operating company and needs to assess the fair value of those assets.

Basic Case Details

Subject of Valuation: 382 units of affordable rental housing and the basement at XX Garden

Client: Shenzhen XX Talent Housing Co., Ltd.

Valuation Date: March 31, 2024

Valuation Method: Income Approach

Project Scale: Total gross floor area of 19,245.93 m², of which 14,638.52 m² is affordable rental housing and 4,607.41 m² is basement space.

Scope of Services: To determine the fair value of the assets included in the valuation scope as of the valuation date and to provide a basis for a reasonable explanation of the assets’ fair value to the client.

Lessons Learned

1. As affordable rental housing is not considered market-based commercial housing, it may not be transferred, and both mortgaging and leasing must comply with relevant policy regulations. Considering the purpose of the valuation, the characteristics of the subject property, and the actual circumstances, the income approach was deemed appropriate for this valuation;

2. Factors such as the category of tenants, the duration of property tax exemption, the benchmark rent standard, and high occupancy rates must be carefully assessed.