Research on Financing Risk Factors of Expressway REITs in China with a Hybrid Approach

Finding sustainable measures for expressway financing has long been a significant issue owing to high demand for funds of expressway construction and maintenance of existing facilities. In the Chinese context of expressway financing it has become imperative to shift from indirect bank financing to Real Estate Investment Trusts (REITs). This research investigates the impact of various factors on the financing risk of expressway REITs and estimates the weight of the impact of various aspects and the link between the factors. We used literature review, keyword co-occurrence analysis and keyword cluster analysis methods to identify 19 risk factors that affect the financing of expressway REITs, then we classified factors into six dimensions: credit risk, underlying asset risk, operational risk, market risk, liquidity risk, and other risk. In addition, a multi-level hierarchical structure model was established by the Integrated Decision-Making and Trial Evaluation Laboratory (DEMATEL) and an interpretative structural model (ISM). The research finds that the project’s future cash flow under-expected risk, price risk, and counterparty limited risk are direct factors, the bankruptcy isolation of the underlying assets risk is a deep factor affecting the financing of expressway REITs, and other factors are indirect factors. This study fills the gap in financing risk of expressway REITs in the context of China and contributes to exploring and establishing the financing risks identification approach and risk factors in expressway REITs based on Chinese contexts. This research presents a theoretical foundation and methodologies for reducing the financing risk of expressway REITs projects and improving financing safety.