1) What is a REIT?

A Real Estate Investment Trust (REIT) is a fund or a trust that owns and manages income-producing commercial real estate (shopping complexes, hospitals, plantations, industrial properties, hotels and office blocks).

A management company for a REIT is permitted to deduct distribution paid to its shareholders from its corporate taxable income. However, to enjoy this tax-free status, the REIT must have most of its assets and income tied to the real estate and distribute at least 90% of its total income to investors/unit holders annually

2) What are the benefits of investing in listed REITs?

Affordability
-> Investment in REITs cost a fraction of the cost of direct investment in real estate. You can start off with a minimal investment outlay.
Liquidity
-> REITs are more liquid compared to physical properties. Shares of publicly-traded REITs are readily converted to cash as they are traded on the stock exchange.
Stable income stream
-> REITs tend to pay out a steady dividend, which is derived from existing rents paid by tenants who occupy the REIT properties.
Exposure to a large-scale real estate
-> The benefits of the real estate are derived on a pro-rated basis through a REIT.
Professional management
-> REIT properties are managed by professionals who will add value for a higher yield, benefiting investors in the long run.

3) How to invest and where to buy REITs?

Similar to trading in stocks, you will be required to have a Central Depository System (CDS) account and a trading account maintained with a broker. You may buy or sell ETFs through your broker, remisier or via online trading during trading hours.

4) What do I have to pay when buying and selling REITs?

Like buying and selling stocks, investors need to pay brokerage commission, stamp duty and clearing fees.

5) What kind of returns can be expected from REITs?

Income distribution based on the distribution policy stated in the REIT's deed; and/or Capital gains which may arise from appreciation of the REIT's price.

6) Typical Conventional REIT Structure



7) REIT risk factor

Refinancing Risks
The ability for REITs to refinance their existing banking facilities are critical to their survival.
Downside Dividend Yields
>Global recession putting strain across all businesses.As a result,dividend yields will come under tremendous pressure with negative rental reversions as businesses try to cut costs.
>Increase interest cost/spreads will also affect the bottom line.
Valuation Pressure
>Property valutations will also come under stress should negative rent reversion persist.
>As valuation fall ,REIT gearing level will increase and possible breaching debt covenants.
>May require balance sheet recapitalisation.
Dilutive Capital Raising
>Dilutive capital raising may be unavoidable in the event of balance sheet recapitalisation.
>REITs with ready sponsor participation will likely to be the first to come to the market.
Market factors
REITs are also subject to market demand and supply. As such, market fluctuations, confidence in the economy and changes in the interest rates may affect REITs price.
Risk Assiociated with Borrowing
>Significant fluctuations in interest rates may have an adverse impact on the financial performance of REIT and may lower income distribution to unit holders.There is an inverse correlation between the interest rates and the distributable income to unit holders.

Other risk include :
- Vacancies following expiry or termination of leases that reduces the REIT income
- The Manager's ability to provide adequate management and maintenance
- Not Sufficient insurance cover for the real estate in case of fire
- Sudden changes in tax regulations
- Poor collection of rent from tenants on a timely basis or tenants going bankrupt
- Lower rent when leases are renewed
- Poor cost control resulting in higher operating and other expenses without a corresponding increase in revenue
- Unexpected expenses due to changes in statutory laws,regulations or government policies.
- Amendment or revocation of the present tax incentives for REIT
- Competition for tenants from other building which may affect rental levels and occupancy rates.

8) Is dividend from REIT subjected to taxes? Can we claim back the tax?

Dividend from REIT are subjected witholding tax (10%) and is not claim back-able.

9) How to select a good REIT ?



Credit to Cherroy
Latest Dividend Distribution Method
AHP : ??
ALAQAR : Cheque
AMFIRST : E-Dividend
ARREIT : E-Dividend
ATRIUM : E-Dividend
AXREIT : E-Dividend
BSDREIT : Cheque
CMMT : E-Dividend
HEKTAR : E-Dividend
IGBREIT : E-Dividend
PAVREIT : E-Dividend
QCAPITA : E-Dividend
STAREIT : E-Dividend
SUNREIT : E-Dividend
TWRREIT : E-Dividend
UOAREIT : E-Dividend

References

http://www.bursamalaysia.com/market/securi...t-trusts-reits/
http://mreit.reitdata.com/

REIT Presentation Slides from AXIS

http://www.axis-reit.com.my/images/axisrei...resentation.pdf
http://www.axis-reit.com.my/images/axisrei...ment%20Tool.pdf

Previous Thread
REIT V3
REIT V2
REIT V1

This post has been edited by Smurfs: Feb 28 2013, 12:01 PM

couldn't add pdf by using file attachment wonder why..

anyway Retail REIT outlook by CIMB (19th July 2012)

This post has been edited by Smurfs: Sep 6 2012, 01:22 PM

updated .. thanks for correcting

expected DPU for 2013 is 6.71 sen according to the prospectus..if price go beyond 1.40 then its yield only about 4.x %

and i notice this REIT bring in many new investor...many of them still have no idea how REIT works.

tomorrow is the day !

IGBreit is coming to town.

STAREIT :

1) is a pure-play hospitality REIT,almost all property under long term lease already.Hence it's income is predictable
2) no major upside due to fixed lease rate.Only 5% increment of lease rate for every 5 years (if i'm not mistaken)
3) low gearing

So if u doesnt mind collecting around 6.9 cents pa for the next 5-10 years( if there is no further injection aka buying new properties ) and without hoping much on capital appreciation , then it is a good choice.

Dividend yield around 6-7 % and with current price it is still trading below NAV.

My point of view

nope u cant claim back the 10 % withholding tax .

2 months old news

Sunway REIT in acquisition mode

''Investor relations manager Crystal Teh said some of the properties it was looking at included two universities, namely Sunway University and Monash University, Sunway Campus, Sunway Giza Shopping Mall and Sunway Medical Centre.''

i meant my link posted above is 2 months old news..

Their property portfolio really diversify..Retail mall , hospitality , office , medical and perhaps education in the near future?

too bad didnt grab some when the price hovering around 1.3 x -1.4x

But the Committed Occupancy of QCT properties is 99 % which is almost fully occupied.Hence i think office space oversupply wont affect QCT much.Furthermore those international company like DHL , IBM , BMW they wont move out in the near future as in setting up an office/commercial building is not an easy task.Quality tenant base plays an important role here.As long as there's tenants , property income is predictable.

Another reason peoples are interested in QCT is because of TESCO penang which located at prime location ( Jelutong Expressway )

And if u've been reading their financial reports or recent annoucement , they do donate to various organization regularly.

SUNREIT keep growing

Cannot compare REIT with other ordinary stock.

YTL corp involve in ordinary business where STAREIT doesnt.

For REIT the income highly predictable.Income is fixed by rental collection and it is like u buy a property and rent it out.

And whats the good / bad of CSR ?

This post has been edited by Smurfs: Dec 25 2012, 09:52 PM

STAREIT reached it's NAV.

Congrats to those who get it at 0.90 early 2012

To me when the REIT price is trading below its premium , then it may consider a good buy

It is just one of the criteria.Need look at other factors too like Dividend Yield , Quality of property , Quality of tenants , Leases , Location of property , gearing ratio , Management team etc..

This post has been edited by Smurfs: Jan 4 2013, 12:40 PM

Invest monthly ? How much you are going to put in monthly? Can breakeven the brokerage fees ?

Will REITs Continue to Rally
http://www.theedgemalaysia.com/insider-asi...e-to-rally.html

Friday, 11 January 2013

Real estate investment trusts (REITs) as a whole did well last year amid the external and domestic uncertainties. The sector outperformed the benchmark FBM KLCI — gaining roughly 16% on average — before taking into account the average net yield of 6.7%. Considering the REITs’ comparatively low risks, unit holders should have been very happy with the total returns.

REITs could still attract risk averse investors …

The undercurrent of caution has persisted coming into the new year. Although outlook for the global economy has brightened — with stabilisation in the eurozone and recovery in the US and China strengthening — uncertainties stemming from the much delayed general election are now the overriding concern, at least in the near term.

… but may not repeat 2012 strong performance

Until we pass this milestone, investors may well continue to take a defensive approach. This, in turn, would bode well for REITs. However, we may not see a repeat performance in terms of gains this year — given the sharp yield compression in 2012.

For instance, retail-focused REITs have been among the most sought after and best performing last year — on the belief that rental incomes will keep trending higher on rising domestic spending.

The three largest retail REITs — Sunway REIT, Pavilion REIT and CMMT — chalked up returns in excess of 30%, including yield from income distributions. IGB REIT, listed only in late September 2012, too gained some 8%.

Retail REITs have little room for further yield compression

As a result, these trusts are now trading at relatively lofty 1.4 to 1.5 times their book values while average net yields have fallen to 4.1% to 4.6%. There is thus, little room for further compression — with yield spread against risk free investments such as one-year fixed deposits having narrowed to just about 1.35%.

Fresh acquisitions may still drive investor interest but as they are, gains may be limited to rental income growth, estimated to be in the single digit. Hektar REIT has been a comparative laggard, perhaps due to its smaller asset size and lower liquidity. The trust is currently trading just a shade below its book value of about RM1.52 while net yield is estimated at 6.3%.

Starhill REIT could see more gains

Outside the retail segment of the market, the best performing trust last year was Starhill REIT. Interest in the trust perked up in the past few months — with a greater clarity on future income stream after the completion of its transformation into a pure hospitality REIT.

Along the same vein, we could see another re-rating for the trust with the completion of its most recent acquisitions — of three Marriott hotels in Australia — at end-November 2012.

While the existing assets will generate fixed lease incomes over a 15-year period (with small escalation built in), earnings from these three hotels are variable on occupancy and rates, translating into higher risks but also offering upside potential.

With the latest acquisitions, Starhill REIT’s total assets are lifted to well over RM3 billion — making it the largest non-retail REIT on the local bourse. Currently trading at just around its book value of RM1.12 with an estimated net yield of about 7.3% for the financial year 2013 ending June (FY13) and 8.2% in FY14 with full-year contributions from the newly acquired hotels, Starhill REIT’s valuations are still attractive and may continue to do well this year.

Lacklustre interest in office REITs translates into higher yields
Not surprisingly, some of the worst performing REITs in 2012 were those with heavy exposure to the office segment of the market, such as AmFirst REIT, Amanah Raya REIT and UOA REIT.

Prevailing expectations for rental increases — and hence, income growth — are low on the rising supply of office space, especially within the Klang Valley. Given the less rosy outlook — although incomes have been fairly resilient on the downside, so far — most of these trusts are trading near or slightly below their book values. Accordingly, their net yields are comparatively higher — estimated at around 6.3%, on average.

Axis REIT has fared comparatively better with its mix of office and industrial portfolio, with a bias towards the latter. The trust has been among the most active in terms of yield accretive acquisitions and thus has a more positive outlook.

Other alternatives may still appeal
Performances of the other two trusts — Al-Hadharah Boustead REIT (plantation) and Al-Aqar Healthcare REIT (healthcare) — fall in between the two major market segments (retail and office). But they still outperformed the benchmark index in 2012, by far.

They may yet appeal to investors by offering better yields than retail REITs and brighter growth outlook than office REITs. Al-Aqar, for instance, has a ready pipeline of assets from its sponsor, KPJ Healthcare Bhd. We estimate net yields from these trusts as still decent at roughly 5.5%, on average, in the current year.

Unit prices for BSDREIT have been buffeted by falling crude palm oil prices (CPO) in recent months. About one-third of the trust’s turnover in 2011 consisted of variable income based on the average CPO prices. Although CPO prices are forecast to rebound later in the year, net income is still expected to decline in 2012/2013. But we suspect the annual distribution per unit may well remain at 12 sen given its low gearing. Downside risks from hereon are also likely to be limited by its book value of about RM1.81.

Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.

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This post has been edited by Smurfs: Jan 17 2013, 05:50 PM

From what i saw in the report , decrease in profit before tax was mainly due to higher borrowing cost on for the acquisition of the australian properties.For more info , check the quarterly report Page 14 , B1 Review of performance.

Net property income and Cash flow from operating activities still healthy.

The manager is optimistic that the Group is expected to achieve satisfactory performance for the financial year ending 30 June 2013.

We shall See.