In order to effectively revitalize the existing infrastructure assets, enhance the quality and efficiency of the capital market in serving the real economy, and enrich the investment and financing tools of the capital market, China began to promote the related work of the real estate investment trust fund pilot in the infrastructure field in 2020. The public welfare of water conservancy projects is very strong, but due to the large investment, low financial yield, long return period, single investment and financing channels, and insufficient construction funds, construction and development are seriously constrained. It is urgent to use REITs and other tools to revitalize the stock, attract incremental, and promote stable investment in water conservancy and make up for weaknesses. Through the REITs case study of agricultural water-saving irrigation franchise projects, it is found that when there is value leakage in infrastructure franchise projects, the modified B-S option model should be used for valuation. The case study shows that the higher the proportion of distributable cash flow used for dividends, the higher the investment income, but the lower the call option value of the project. In the case of high premium transfer of the project, the higher the proportion of bank loans and the shorter the repayment time, the lower the IRR and investment income may be. The greater the volatility of earnings, the greater the call option value, but the IRR may decline. The adoption of B-S option pricing model enriches the existing methods for the valuation of REITs assets in the form of public offering of management rights, which is worth popularizing and applying. It is instructive in practice to calculate the IRR under different loan proportions and the same repayment method and select the appropriate loan proportion when raising REITs for M&A loans.
franchise; public offering REITs; B-S Option Pricing Model; M&A loans; income measurement