Real estate investment trust

corporate income tax, a REIT must: . 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.

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. It does this primarily through its portal www.reita.org, providing knowledge, education and tools for financial advisers and investors. 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. A real estate investment trust, or REIT, is a company that owns, and in most cases, operates income-producing real estate.

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. REITs face challenges from both a slowing economy and the global financial crisis, depressing share values by 40 to 70 percent in some cases. After originating in the United States in 1960, the REIT concept was launched in Australia in 1971.

It will curb speculation in Pakistani real estate markets and gives access to small investors diversifying into real estate as well. Nonetheless there still is political resistance to these plans, especially by the social democratic party ( SPD ).

Hong Kong issuers use of financial engineering (interest rate swaps) to improve initial yields has also been cited as having deterred investors interest India is currently in the process of formulating definitive legislation for the introduction and smooth functioning of REITs in the Indian real estate market. They are required to be configured as trusts and are not taxed if they distribute their net taxable income to shareholders.

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. The legal details seem to adopt much of UK-REITs regulations (taxation, public listing, etc.), as far as it is possible to tell yet. A law concerning G-REITs was enacted 1 June, 2007, and is retroactive to 1 January, 2007. 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.

To be a REIT, a company must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends. In order to qualify for the advantages of being a pass-through entity for U.S. REITs have been excluded from the income trust tax legislation proposed in the 2007 budget by the Conservative government.

Locally they are denominated FIIs or Fundos de Investimento Imobiliário . 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.

The other four were: Brixton, Great Portland Estates, Primary Health and Workspace Group. British REITS have to distribute 90% of their income. 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. A J-REIT may be structured as an independent corporation or as a contractual relationship through a trust bank. 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. 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.

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. The REIT structure was designed to provide a similar structure for investment in real estate as mutual funds provide for investment in stocks. Like other corporations, REITs can be publicly or privately held.

Reita s aim is to raise awareness and understanding of REITs and investment in quoted property companies. The Securities and Exchange Commission of Pakistan following regulatory framework similar to Singapore and Hong Kong REITs. 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.

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. Government fears that failing to introduce REITs in Germany would result in a significant loss of investment capital to other countries.

More than 12 percent of global listed property trusts can be found on the ASX. 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). 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).

Some REITs finance real estate. 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. 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.

Except for The Link and Regal Real Estate Investment Trust, share prices of all but one are significantly below IPO price. There are currently 20 REITs listed on the SGX, starting with CapitaMall Trust in July 2002.

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. They have since been renamed Australian Real Estate Investment Trusts (A-REITs) in line with international practice. There are now more than 70 A-REITs listed on the ASX, with market capitalisation in excess of A$100bn. Australia is also receiving growing recognition as having the world’s largest REITs market outside the United States.

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. REITS were introduced in Bulgaria in 2004 with the so called Special Purpose Investment Companies Act . Other key bodies involved are the London Stock Exchange the British Property Federation and Reita.

they are not subject to corporate income tax), but are subject to numerous restrictions. Canadian REITs were established in 1993. General Property Trust was the first Listed Property Trust (LPT) on the Australian stock exchanges (now the Australian Securities Exchange).

They represent a range of property sectors including retail, office, industrial, hospitality and residential. 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. 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.

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. Many Canadian REITs have limited liability. Germany is also planning to introduce German REITs (short, G-REITs) in order to create a new type of real estate investment vehicle.

In return, REITs are required to distribute 90% of their income, which may be taxable, into the hands of the investors. They are pass-through entities for corporate income tax purposes (i.e.

S-REITs hold a variety of properties in countries including Japan, China, Indonesia and Hong Kong, in addition to local properties. S-REITs are regulated as Collective Investment Schemes under the Monetary Authority of Singapore s Code on Collective Investment Schemes . S-REITs benefit from tax advantaged status. 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 ). Pakistan is recently seeing an outflux of investments by foreign real estate development mostly Malaysian and Dubai based companies. Commonly referred to as S-REITs.

As of June 2006 the ministry of finance has announced that they still plan to introduce G-REITs in 2007. J-REIT securities are traded on the Tokyo Stock Exchange, and most participants are Japanese conglomerates and foreign investment banks. 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.