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GROUP 5
• Manhar Bajaj B027
• Mit Solanki B029
• Muskaan Samal B030
• Navya Seth B031
WHAT IS REIT’S?
• Most REITs are traded on major stock exchanges, but there are
also public not listed and private REITs. The two main types of
REITs are Equity REITs and Mortgage REITs .
• Equity REITs
• Mortgage REITs
• Hybrid REITs
EQUITY REITs
• Equity REITs mostly own and operate income-producing real estate. They
increasingly have become real estate operating companies engaged in a wide
range of real estate activities, including leasing, maintenance and
development of real property and tenant services.
• One major distinction between Equity REITs and other real estate companies
is that a REIT must Acquire and Develop its properties primarily to operate
them as part of its own portfolio rather than to resell them once they are
developed.
MORTGAGE REITs
• Mortgage REITs mostly lend money directly to real estate owners and
operators or extend credit indirectly through the acquisition of loans or
mortgage-backed securities.
• Today's Mortgage REITs generally extend mortgage credit only on existing
properties.
• Their revenues are generated primarily by the interest that they earn on
mortgage loan.
HYBRID REITs
• Like all companies whose stocks are publicly traded, stock exchange-listed REIT
shares are priced by the market throughout the trading day.
• To assess the investment value of REIT shares, typical analysis involves
one or more of the following criteria:
• Units of REITs can be traded on major securities trading platforms like BSE
and NSE.
• From the funding received by the unit holders minimum of 80% is invested
in completed and rent generating projects
Japan (2000)
Singapore (2002) Mexico (2011)
United States Australia Canada (1994)
Hong Kong (2003) Pakistan (2013)
(1960) (1971) Brazil (1995)
Malaysia (2005) South Africa (2013)
UK (2007)
UNITED STATES
HONGKONG
REIT Singapore
• In December 2004, Hong Kong attempted to launch its first REIT via the Link
REIT.
• REIT’s have been in existence in Hong Kong since 2005.
• In November 2005, Link REIT (US$ 2.6 billion) was successfully launched and
heavily over-subscribed. Link REIT was the world’s largest REIT IPO,with a 6%
dividend yield to March 2007
• Since 2005, there have been 7 REIT listings as at July 2007, most of which,
including Sunlight REIT have not enjoyed success because of low yield.
• In the first quarter of 2007, there is a listing of Regal REIT and recently, we
have seen Mainland China’s launching REITs in Hong Kong market.
• As of July 2012 there are nine REITs listed with a total market capitalisation of
approximately €15 billion which amounts to almost 2% of the total global REIT
market capitalisation.
REIT UNITED STATES
• Real Estate Investment Trusts first came to the spotlight around fifty
years ago.
• In the 1970s and 1980s it was at a developing phase. It was in the 1990s,
where the sector had achieved a substantial growth.
• The U.S. REITs are classified on the basis of their investment form.
• The REIT paved the way for the small and medium scale investors, and
allowed free flow sales and purchases for their income-generating
portfolios.
• As of Jan. 31, 2014, there were 204 REITs registered with the
Securities and Exchange Commission in the United States.
• During the 55 years of REIT history, the U.S. REIT market has gone
through a roller coaster ride.
UK REIT
• From a relatively slow start in 2007, the number of UK real estate investment
trusts (UK-REITs) is growing.
Activity Rules
• Define a Tax Exempt Business (ring-fenced)
• 75% of firm’s profit from real estate (rents)
• 75% of firm’s assets = real estate
• Must have three properties (not owner occupied)
• Development activity OK for portfolio building (3 year rule)
Global comparison of REIT’s in key economies
Benefits of REIT’s in India
For Investors:
• The report estimates that the value of REIT-eligible stock is seen to be the
highest in Bengaluru (USD 15.8 billion )/INR 1,05,213 crore)
• Mumbai (USD 14.5 billion/INR 96,461 crore) comes a close second due to
higher capital values of commercial properties, despite having roughly half of
Bengaluru’s REIT-able stock.
• The entry of higher number of foreign brands over the years would likely spur
the requirement of quality malls in major cities. Going forward, there is over 25
msf of malls space that is currently under construction across the eight cities
and is expected to get operational by 2018. These malls would provide investors
with an array of investment options in the retail asset class.
INDIA IS A CONDUCIVE ENVIRONMENT FOR REIT’S
• Growing economy
• Increasing working age populationHousing and urban
infrastructure requirement
• Housing and urban infrastructure requirement
• Worldwide, an affordable office space
In the near future, we expect the REIT vehicle to increase the depth of the
Indian property market through enhanced transparency and governance
standards.
THANKYOU