Real estate investment trust

   A Real Estate Investment Trust or REIT (pronounced /ˈriːt/) is a tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes. In return, REITs are required to distribute 90% of their income, which may be taxable, into the hands of the investors. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks.[citation needed]

Like other corporations, REITs can be publicly or privately held. Public REITs may be listed on public stock exchanges like shares of common stock in other firms.

REITs can be classified as equity, mortgage or hybrid.

The key statistics to look at in a REIT are its net asset value (NAV), adjusted funds from operations (AFFO) and cash available for distribution (CAD). REITs face challenges from both a slowing economy and the global financial crisis, depressing share values by 40 to 70 percent in some cases.[1]Contents [hide]
1 Australia
2 Brazil
3 Bulgaria
4 Canada
5 Germany
5.1 Qualification
6 Hong Kong
7 India
8 Japan
9 Pakistan REITs
10 Singapore
11 United Kingdom
12 United States
12.1 Qualification
13 References
14 See also
15 External links

[edit]
Australia
Main article: Australian real estate investment trust

After originating in the United States in 1960, the REIT concept was launched in Australia in 1971. General Property Trust was the first Listed Property Trust (LPT) on the Australian stock exchanges (now the Australian Securities Exchange). REITs which are listed on an exchange were known as Listed Property Trusts (LPTs) until March 2008, distinguishing them from private REITs which are known in Australia as Unlisted Property Trusts. They have since been renamed Australian Real Estate Investment Trusts (A-REITs) in line with international practice.[citation needed]

There are now more than 70 A-REITs listed on the ASX, with market capitalisation in excess of A$100bn.[citation needed]

Australia is also receiving growing recognition as having the world’s largest REITs market outside the United States. More than 12 percent of global listed property trusts can be found on the ASX.[citation needed]
[edit]
Brazil

REITS were introduced in Brazil in 1993 by the law 8668/93 and initialy ruled by the instruction 205/94 and, nowadays, by instruction 472/08 from CVM (Comissao de Valores Mobiliários - which is the Brazilian equivalent of SEC). Locally they are denominated FIIs or "Fundos de Investimento Imobiliário". FII's dividends are free of taxes for personal investors (not companies) since 2006, but only for the funds which has at least 50 investors and that are publicly negotiated in the stock market. FIIs, referred to as “REIT” as the similar investment vehicle in the US, have been used either to own and operate independent property investments and associated with a single property or a portion thereof, or owning several real properties (multiple properties) and funding them through the public capital markets.[citation needed]
[edit]
Bulgaria

REITS were introduced in Bulgaria in 2004 with the so called "Special Purpose Investment Companies Act". They are pass-through entities for corporate income tax purposes (i.e. they are not subject to corporate income tax), but are subject to numerous restrictions.[citation needed]
[edit]
Canada

Canadian REITs were established in 1993. They are required to be configured as trusts and are not taxed if they distribute their net taxable income to shareholders. REITs have been excluded from the income trust tax legislation passed in the 2007 budget by the Conservative government. Many Canadian REITs have limited liability.[2]
[edit]
Germany

Germany is also planning to introduce German REITs (short, G-REITs) in order to create a new type of real estate investment vehicle. Government fears that failing to introduce REITs in Germany would result in a significant loss of investment capital to other countries. Nonetheless there still is political resistance to these plans, especially by the social democratic party ('SPD'). As of June 2006 the ministry of finance has announced that they still plan to introduce G-REITs in 2007. The legal details seem to adopt much of UK-REITs regulations (taxation, public listing, etc.), as far as it is possible to tell yet.[citation needed]

A law concerning G-REITs was enacted 1 June, 2007, and is retroactive to 1 January, 2007.[3]
[edit]
Qualification
REITs will have to be established as a corporation "REIT-AG" or "REIT-Aktiengesellschaft".
At least 75% of its assets have to be invested in real-estate.
At least 75% of the G-REIT's gross revenues must be real-estate related.
At least 90% of the REIT's taxable income has to be distributed to its shareholders through dividends.
The corporation is income-tax-exempt, but the shareholders will have to pay individual income tax on the dividends.
[edit]
Hong Kong

REITs have been in existence in Hong Kong since 2005, when The Link REIT was launched by the Hong Kong Housing Authority on behalf of the Government. Since 2005, there have been 7 REIT listings as at July 2007, most of which, including Sunlight REIT have not enjoyed success due to low yield. Except for The Link and Regal Real Estate Investment Trust, share prices of all but one are significantly below IPO price. Hong Kong issuers' use of financial engineering (interest rate swaps) to improve initial yields has also been cited as having deterred investors' interest[4]
[edit]
India

India is currently in the process of formulating definitive legislation for the introduction and smooth functioning of REITs in the Indian real estate market. Once introduced these Indian REITs (country specific/generic version I-REITs) will help individual investors enjoy the benefits of owning an interest in the securitised real estate market. The best benefit being that of fast and easy liquidation of investments in the real estate market unlike the traditional way of disposing real estate. The government and Securities and Exchange Board of India SEBI through various notifications is in the process of easing the norms of investing in real estate in India directly and indirectly through foreign direct investment, through listed real estate companies, mutual funds etc. With the current real estate boom and the market being flooded with Initial Public Offer of various listed real estate companies in India it will be the best time for investors to own a share of the profiting market economy. Legislative framework, revised investment norms, a favourable investment opportunity, and a clear taxation policy will provide the right kind of investing opportunity in India in the time to come.[citation needed]
[edit]
Japan

Japan is one of a handful of countries in Asia with REIT legislation (other countries/markets include Hong Kong, Singapore, Malaysia, Taiwan and Korea), which permitted their establishment in December 2001. J-REIT securities are traded on the Tokyo Stock Exchange, and most participants are Japanese conglomerates and foreign investment banks.[citation needed]

Since the burst of the real estate bubble in 1990, property prices in Japan have seen steady drops through 2004, with some signs of price stabilization and possibly price increase in 2005 and 2006. Some see J-REITs as a way to increase investment in the real estate market, although notable increases in asset values has not yet been realized.[citation needed]

A J-REIT may be structured as an independent corporation or as a contractual relationship through a trust bank.[citation needed]

In addition to REITs, Japanese law also provides for a parallel system of special purpose companies which can be used for the securitization of particular properties, but not for the maintenance of a real estate portfolio.[citation needed]
[edit]
Pakistan REITs

Pakistan's regulatory body Securities and Exchange Commission of Pakistan is in process of implementing REIT regulatory framework that will allow full foreign ownership, free movement of capital and unrestricted repatriation of profits. It will curb speculation in Pakistani real estate markets and gives access to small investors diversifying into real estate as well. The Securities and Exchange Commission of Pakistan following regulatory framework similar to Singapore and Hong Kong REITs.[citation needed]

The Securities and Exchange Commission of Pakistan expects that about six REITs will be licensed within the first year, mainly large assets management companies applying for it. Pakistan is recently seeing an outflux of investments by foreign real estate development mostly Malaysian and Dubai based companies.[5]
[edit]
Singapore

Commonly referred to as S-REITs. There are currently 20 REITs listed on the SGX, starting with CapitaMall Trust [6] in July 2002. They represent a range of property sectors including retail, office, industrial, hospitality and residential. S-REITs hold a variety of properties in countries including Japan, China, Indonesia and Hong Kong, in addition to local properties.[citation needed]

S-REITs are regulated as Collective Investment Schemes under the Monetary Authority of Singapore's Code on Collective Investment Schemes [7], or alternatively as Business Trusts [8].

S-REITs benefit from tax advantaged status.
[edit]
United Kingdom

The legislation laying out the rules for REITs in the United Kingdom was enacted in the Finance Act 2006 and came into effect in January 2007 when nine UK property companies converted to REIT status, including the five that were FTSE 100 members at that time: British Land, Hammerson, Land Securities, Liberty International and Slough Estates (now known as "SEGRO"). The other four were: Brixton, Great Portland Estates, Primary Health and Workspace Group.[citation needed]

British REITS have to distribute 90% of their income. They must be a close-ended investment trust and be UK resident and publicly listed on a stock exchange recognised by the Financial Services Authority.[citation needed]

To support the introduction of REITs in the UK, the REITs and Quoted Property Group was created by several commercial property and financial services companies. Other key bodies involved are the London Stock Exchange the British Property Federation and Reita. The Reita campaign was launched on 16 August 2006 by the REITs and Quoted Property Group, in order to provide a source of information on REITs, quoted property and related investments funds. Reita's aim is to raise awareness and understanding of REITs and investment in quoted property companies. It does this primarily through its portal www.reita.org, providing knowledge, education and tools for financial advisers and investors.[citation needed]

Doug Naismith, managing director of European Personal Investments for Fidelity International, said: "As existing markets expand and REIT like structures are introduced in more countries, we expect to see the overall market grow by some ten percent per annum over the next five years, taking the market to $1 trillion by 2010."[citation needed]
[edit]
United States
See also: List of public REITs in the United States

A real estate investment trust, or REIT, is a company that owns, and in most cases, operates income-producing real estate. Some REITs finance real estate. To be a REIT, a company must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.[citation needed]
[edit]
Qualification

In order to qualify for the advantages of being a pass-through entity for U.S. corporate income tax, a REIT must:
Be structured as corporation, trust, or association[9]
Be managed by a board of directors or trustees[10]
Have transferable shares or transferable certificates of interest[11]
Otherwise be taxable as a domestic corporation[12]
Not be a financial institution or an insurance company[13]
Be jointly owned by 100 persons or more[14]
Have 95 percent of its income derived from dividends, interest, and property income[15]
Pay dividends of at least 90% of the REIT's taxable income
No more than 50% of the shares can be held by five or fewer individuals during the last half of each taxable year (5/50 rule)
At least 75% of total investment assets must be in real estate
Derive at least 75% of gross income from rents or mortgage interest
No more than 20% of its assets may consist of stocks in taxable REIT subsidiaries.

Apartment

An apartment, or flat, is a self-contained housing unit that occupies only part of a building. Such a building may be called an apartment building, especially if it consists of many apartments for rent. Apartments may be owned by an owner/occupier or rented by tenants.

The term apartment is favored in North America, whereas the term flat is commonly, but not exclusively, used in the United Kingdom, Hong Kong and most Commonwealth countries. In Malaysian English, flat often denotes a housing block of lesser quality meant for lower-income groups, while apartment is more generic and may also include luxury condominiums.

Tenement law refers to the feudal basis of permanent property such as land or rents. May be found combined as in "Messuage or Tenement" to encompass all the land, buildings and other assets of a property.

In the US, some apartment-dwellers own their own apartments, either as co-ops, in which the residents own shares of a corporation that owns the building or development; or in condominiums, whose residents own their apartments and share ownership of the public spaces. Most apartments are in buildings designed for the purpose, but large older houses are sometimes divided into apartments. The word apartment connotes a residential unit or section in a building. In some locations, particularly the United States, the word denotes a rental unit owned by the building owner, and is not typically used for a condominium.

In the UK, some flat owners own a share in the company that owns the freehold of the building. This is commonly known as a "share of freehold" flat. The freehold company has the right to collect annual ground rents from each of the flat owners in the building. The freeholder can also develop or sell the building, subject to the usual planning and restrictions that might apply.

In some countries the word unit is a more general term referring to both apartments and rental business suites. The word is generally used only in the context of a specific building; e.g., "This building has three units" or "I'm going to rent a unit in this building", but not "I'm going to rent a unit somewhere." In Australia, a unit refers to flats, apartments or even semi-detached houses. Some buildings can be characterized as mixed use buildings, meaning part of the building is for commercial, business, or office use, usually on the first floor or first couple floors, and there are one or more apartments in the rest of the building, usually on the upper floors.

When there is no tenant occupying an apartment, the apartment owner or landlord is said to have a vacancy. For apartment landlords, each vacancy represents a loss of income from rent-paying tenants for the time the apartment is vacant (i.e., unoccupied). Landlords' objectives are often to minimize the vacancy rate for their units. The owner of the apartment, typically when transferring possession to the occupant, gives him/her the key to the apartment entrance and any other keys needed, such as a common key to the building or any other common areas and a mailbox key. When the occupant(s) move out, these keys are typically returned to the owner.

Real Estate all over the world

       This website contains a lot of information about everything concerning real estate: brokers, home rental or searching to buy a home for example. Next to relevant information about the real estate market in Europe, you will also find information about other brokers for buying or renting a house or holiday cottage abroad, etc.

On this site you will find a lot of brokers who show their offers. The buying or renting of an appartement or home in- or outside the country has now become easier due to the internet. You may certainly find a broker in your region or if you think about a home in France, Spain or elsewhere in Europe, just click on the International Real Estate Marketplace.

Do you seek a commercial space to start your own business in Europe or elsewhere, you can always find the right brokers.
When you seek to rent or buy office space or a place to open a shop, we are there for you. Click on the specific info about the specialised sites.
We are pleased to welcome you on this site, which will grow until it becomes the biggest resource on the web about searching, building, renting, buying and selling cottages, villas, condos and appartments all over the world. You will also find information about different ways to invest. Please enjoy your stay...
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Apartment

An apartment, or flat, is a self-contained housing unit that occupies only part of a building. Such a building may be called an apartment building, especially if it consists of many apartments for rent. Apartments may be owned by an owner/occupier or rented by tenants. The term apartment is favored in North America, whereas the term flat is commonly, but not exclusively, used in the United Kingdom, Hong Kong, Ireland and most Commonwealth countries. In Malaysian English, flat often denotes a housing block of lesser quality meant for lower-income groups, while apartment is more generic and may also include luxury condominiums. Tenement law refers to the feudal basis of permanent property such as land or rents. May be found combined as in "Messuage or Tenement" to encompass all the land, buildings and other assets of a property. In the US, some apartment-dwellers own their own apartments, either as co-ops, in which the residents own shares of a corporation that owns the building or development; or in condominiums, whose residents own their apartments and share ownership of the public spaces. Most apartments are in buildings designed for the purpose, but large older houses are sometimes divided into apartments. The word apartment connotes a residential unit or section in a building. In some locations, particularly the United States, the word denotes a rental unit owned by the building owner, and is not typically used for a condominium. In the UK, some flat owners own a share in the company that owns the freehold of the building. This is commonly known as a "share of freehold" flat. The freehold company has the right to collect annual ground rents from each of the flat owners in the building. The freeholder can also develop or sell the building, subject to the usual planning and restrictions that might apply. In some countries the word unit is a more general term referring to both apartments and rental business suites. The word is generally used only in the context of a specific building; e.g., "This building has three units" or "I'm going to rent a unit in this building", but not "I'm going to rent a unit somewhere." In Australia, a unit refers to flats, apartments or even semi-detached houses. Some buildings can be characterized as mixed use buildings, meaning part of the building is for commercial, business, or office use, usually on the first floor or first couple floors, and there are one or more apartments in the rest of the building, usually on the upper floors. When there is no tenant occupying an apartment, the apartment owner or landlord is said to have a vacancy. For apartment landlords, each vacancy represents a loss of income from rent-paying tenants for the time the apartment is vacant (i.e., unoccupied). Landlords' objectives are often to minimize the vacancy rate for their units. The owner of the apartment, typically when transferring possession to the occupant, gives him/her the key to the apartment entrance and any other keys needed, such as a common key to the building or any other common areas and a mailbox key. When the occupant(s) move out, these keys are typically returned to the owner.

Real estate pricing

The

median home price is one of the most common measurements mistakenly used to compare real estate prices in different markets, areas, and periods. It is said to be less biased than the mean (average) price since it is not as heavily influenced by small number of very highly priced homes. However, this is not true. Actually, it is more biased than the mean because it is more easily influenced by abnormalities in the market, such as an extraordinary influx of say, low-selling foreclosure sales prevalent in an economic downturn. ( The statement made up to this point by the previous author is completely false, by statistical definition "the mean is affected by each and every value, which is an advantage. The mean uses all the data and each data item influences the mean. It is also a DISADVANTAGE because extremely large or small values can cause the mean to be pulled to the extreme value" (Business Statistics for Contemporary Decision Making, 5th edition, Black K. p 51). In other words in the authors attempted example....all those lower price houses are actually affecting the mean (average price) MORE than they would affect the Median. "The Median is unaffected by the magnitude of extreme scores" Business Statistics for Contemporary Decision Making, 5th edition, Black K. p 49). all the data and each data item influences the mean. The mean is unbiased ONLY when extreme outliers in the data are not present, the median is not influenced by extreme values. The term "outlier" is a statistical term dictating how relevant say a home price is to the other prices in the set of prices, there are specific tests for this but the best example perhaps would be the following. Nine homes all sell for prices in the range of say 100-140,000 dollars but one home sells for 225,000. This number would be considered an "outlier" to the rest of the data (example is too complicated to write here) but the point is that the number is substantially different than the sales prices of the other homes. In the authors example the mean would be substantially MORE influenced by the "influx of low sales price of homes than the Median would. One way to determine what to sell your home for would be to look at the numbers that composed the average, are they relatively similar-within 5-10% of each other or are they significantly far apart 15% or greater. If the prices look like they are all over the board than take each price and write them in order from the smallest to the largest price. The number that is in the middle of that list you just made would be the Median. If you have a list of numbers with an even number of prices in it (say 8 different prices) the median is found by adding the 4th and 5th prices together and then dividing that result by 2. In the case of any list if there is an even number of prices you add the two middle terms and divide by two. Should you use the Median or the Mean? Well the answer in todays market is tricky. The next item to look at is "days on the market". So perhaps a home in your area sold for a nice price but was on the market for 5 months (150 days). Do you (can you) afford to wait that long? If so, do not be afraid to keep your realtor in check by telling him/her what price you want to sell at remember they work for you. You should also follow up to be certain your home is listed and they are not ignoring the listing because they do not want to put in the work at that price. A good realtor will work hard at every price and let you be wrong for perhaps 21 days. At which point the good realtor will show you their efforts vs results and you will probably reason with them to drop your price a few percent. Do not be afraid to use a median price if the sales prices are really scattered and the Median price is actually higher than the Mean. Any realtor who fights statistically factual information when your answer is a higher selling price than theirs is doing you a disservice and just doesn't want to wait to get paid. Nobody wants to wait forever to get a check but you have a right to sell your home at a price that is relative to your situation-not your realtors. Generally speaking the mean is an OK measurement but it's useless when you only use the standard "few comparables" that is generally used. In todays market especially, if you want to know the REAL price to sell your home for than use the mean of perhaps ten of the most recent sales and than ask your realtor to perform a "t-test at the 95% confidence interval to determine the high and low range values. (Watch your realtor's eyes roll back in his/her head when you present this idea). This answer to this test is saying that, there is a 95% chance that the mean sales price is between the upper and lower values. If you strictly use the mean you have a 50% chance of being correct....it's your money, would you rather be 50% right or 95% right? Any basic statistics book such as "Business Statistics for contemporary Decision making, 5th Edition, Black, K., p 310) or engineering friend will be able to show you how to do this calculation. But let's remember Real Estate is a license and these individuals are good at presentation, centralizing a place where buyers and sellers can meet, and working the process. They are not however necessarily adept at statistics. Continue on for more entertainment in this article. Common Realtor arguments for establishing a low sales price include: "I've been doing this for ex years...blah blah blah" " I know this market better than anyone" Translate this and similar phrases into the following: " I really don't wanna work hard and so I wanna set your house price at the lowest level possible so we can unload it and I can move on" They may refute that statement saying they get paid more if the house sells for more but when you consider a slow moving real estate market. A house selling at $275,000 would net one realtors firm 3% or $8,250. That same house selling at $310,000 would net the realtor (at 3%) $9,300. BUT if they had to wait 90 days to get that extra 1,050 they won't do it. The real question is can you yourself afford to wait 90 days for an extra $35,000. That's about 11,000 per month in your pocket-not bad change. So listening to a lazy realtor can cost you some serious cash. Now on the the humorous AND obvious attempt of a dim-witted realtor's attempt at explaining statistics This is due to the tiny sampling size of just 1 (or at best) 2 sales that the median sale represents. The median introduces an unacceptable level of Sampling error. The mean, though not perfect, is superior to the median because it at least eliminates sampling error by utilizing all of the available sales. Rents and prices are often expressed per square foot to act as a basis of comparison. Home prices are limited by various factors, such as the incomes of potential buyers, the cost and ability to construct new property to increase supply, and demand for rental units. Since eighty percent of all homes purchased are purchased with a mortgage,[citation needed] the ability to make payments, borrow money, and the cost of borrowing money are major influences limiting how far prices can rise before hitting resistance due to prices hitting levels where potential are unable to qualify.[who?] In general the ratio in the US are home values at 2-4 times annual income levels.[citation needed]

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Mortgages

     A mortgage is the transfer of an interest in property (or the equivalent in law - a charge) to a lender as a security for a debt - usually a loan of money. While a mortgage in itself is not a debt, it is the lender's security for a debt. It is a transfer of an interest in land (or the equivalent) from the owner to the mortgage lender, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied or performed. In other words, the mortgage is asecurity for the loan that the lender makes to the borrower.This comes from the Old French "dead pledge," apparently meaning that the pledge ends (dies) either when the obligation is fulfilled or the property is taken throughforeclosure.[1]In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than on other property (such as ships) and in some jurisdictions only land may be mortgaged. A mortgage is the standard method by which individuals and businesses can purchase real estate without the need to pay the full value immediately from their own resources. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property