Real Estate Investment Trusts
From Financial Literacy Wiki
Real Estate Investment Trusts or commonly known as REITs is a new investment instrument in Singapore. The first REIT was floated in July 2002 and the REIT is CapitalMall Trust, a retail property trust managed by CapitaLand.
REIT is a vehicle for investment in a portfolio of real estate assets, usually established with a view to generating income for unit holders. REITs assets are professionally managed and revenues generated from assets (primarily rental income) are normally distributed to you, as a unit holder at regular intervals (most common is quarterly distribution). Units of listed REITs are bought and sold like any other securities listed on exchanges at market-driven prices, thus the transaction costs associated with trading securities applies as well.
The underlying assets of a REIT could include commercial, retail, industrial and residential properties that are located within a specified country or region. They can invest in listed or unlisted debt securities and listed shares of or issued by local or foreign non-property companies, securities issued on behalf of the Singapore government or foreign governments. The majority of a REIT's assets must, however, be made up of real estate or real estate-related assets.
Most REITs have annual managers' fees, property management fees, trustees' fees and other expenses that will be deducted from their cash yields before distributions are made.
