International REITs

Kaiwen Leong

Description

Dream of buying an apartment or landed property? What about a luxury shopping mall, office block or five-star hotel? Such dreams are completely possible and at not too expensive or far-fetched. With Real Estate Investment Trusts (REITs), you'll be able to invest in properties you never thought you could own. REITs derive income from top-notch properties around the world across various industries so buying into a REIT makes you an indirect landlord of their properties. If the REIT soars, you soar - and you don't have to be a millionaire to invest and to sweeten the deal, most REITs enjoy tax-free income. But to invest, you've got to know which REIT to pick. This book will equip you with the tools to evaluate any REIT you come across and simultaneously guide you through the major global markets. To seal the deal, the book will also reveal true stories from the investing world, so you can learn from the best and avoid the pitfalls.

Sujets

• Economie gestion
• Finance
• Asia

Informations

• Publié par: Marshall Cavendish International
• Date de parution: 20 septembre 2014
• Nombre de lectures: 0
• EAN13: 9789814634779
• Langue: English

Extrait

INTERNATIONAL
REITS
HOW TO INVEST OVERSEAS AND BUILD AN INTERNATIONAL PORTFOLIO
KAIWEN LEONG, WENYOU TAN AND ELAINE LEONG
2014 Marshall Cavendish International (Asia) Private Limited
Published by Marshall Cavendish Editions An imprint of Marshall Cavendish International 1 New Industrial Road, Singapore 536196
All rights reserved
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National Library Board, Singapore Cataloguing-in-Publication Data
Leong, Kaiwen. International REITs : how to invest overseas and build an international portfolio / Kaiwen Leong, Wenyou Tan and Elaine Leong. - Singapore : Marshall Cavendish Business, 2014 pages cm ISBN : 978-981-4561-32-7 (paperback) eISBN: 978 981 4634 77 9
1. Real estate investment trusts. II. Tan, Wenyou, author. III. Leong, Elaine, author. IV. Title.
HG5096
332.63247 - dc23 OCN885369146
Printed in Singapore by Fabulous Printers Pte Ltd
Disclaimer
The case studies presented book are based on the authors encounters with individuals and companies. However, details have been changed or omitted to protect their identities.
CONTENTS
Introduction: REITs the right way
Chapter 1 Know Your Investment
Chapter 2 Types of REITs
Chapter 3 Beyond the BS
Chapter 4 Reading between the Lines
Chapter 5 When Due Diligence is Due
Chapter 6 How Much is the REIT Worth?
Chapter 7 Building the Ultimate Portfolio
Chapter 8 Hong Kong: The Asian Dragon
Chapter 9 United States: Birthplace of the REITs
Chapter 10 Malaysia: Southeast Asia s Tiger Economy
Chapter 11 China: Crossing the Great Wall
Chapter 12 Conclusion: Into the Future
Acknowledgements
About the Authors
INTRODUCTION
REITS THE RIGHT WAY
We know why you re reading this book. We know why you picked it out and why you paid for this. It wasn t out of charity. It wasn t out of foolishness. It was for a chance to make more money.
Are you re trying to figure out how to add a few hundred dollars to your bank account? Are you desperately trying to save a few dollars during lunch everyday? Remember that you re not going to get rich if you keep on thinking that way. To make big money, you ve got to think big. You ve got to go beyond saving and think about investing.
That s right. Let s go beyond cash and talk about owning property - not just the small flats in the outskirts but five-star hotels, luxury shopping malls, and prime office towers - after all, that s where real money is to be made.
Now you re probably ready to close this book and walk away. If you don t even own a place of your own, how would it be possible for you to own a part of the towering skyscraper in the central business district? How can you profit from the high-end shopping malls that you ve always visited but not bought anything from? We re here to tell you that it is possible. You can participate in the growth of these prime properties. If you walk away now, you won t just walk away poorer, but you ll have lost a chance to start investing. If you re ready to start working towards making money, then REITs are for you.
REITs is an acronym, an abbreviation that is usually formed from the first letters of each word, which stands for Real Estate Investment Trusts. The small s is at the end simply shows that we are referring to many REITs, and not just a single one. So what exactly is a REIT and how can it benefit you?
Let s say you know the manager of a REIT. Let s call him Robert the REIT manager. He comes up to you and says, Hi. I have about five retail malls, two office buildings, and three hotels under my care. Would you like to invest?
Five retail malls, two office buildings, and three hotels! You re about to faint from shock. It s like you ve been handed gold on a diamond platter. But can you afford to invest? Will your bank balance make the cut? Finally, you summon the courage to ask, Umm, perhaps. What is the minimum required investment?
You wonder how large and ludicrous the sum is going to be. Some six-digit figure which you don t have?
It s up to you, Robert says, shrugging. It can be as little as a few hundred to a few thousand, or as much as a few million.
Just a few thousand and you can land yourself a portion of the five retail malls, two office buildings, and three hotels? It sounds too good to be true. You wonder if you are dreaming but pull yourself together just in time. There has to be a catch here somewhere. So, you say, in your most serious voice. Do I get taxed heavily, or something?
Absolutely not. There s no tax on the dividends that you get.
Are you saying that I will definitely get dividends?
As a Singaporean REIT, we are legally required to pay 90 percent of our profits out to our unit holders. 1
So does this mean my capital is locked in? I won t be able to get it back?
It s a very liquid investment instrument, Robert says. You can sell it anytime on the secondary market if you want.
Aha! you exclaim, thinking you ve found a catch. What if the markets crash? What if there s a crisis? I might lose all my money!
There s no investment that is 100 percent invulnerable to financial crises. If the real estates markets crash, of course, our ability to pay out dividends will be weakened. But in general, REITs have shown that they can weather crises relatively well.
Really? you say skeptically. What s the evidence of that?
During the 2008 financial crisis, not a single Singaporean REIT suspended dividend payouts. We also took measures to prevent rental defaults, high vacancy rates, and premature lease cancellations.
Hmm, you say, trying desperately to think of more comebacks. But nothing comes to your mind.
How on earth is that possible? you ask weakly.
Robert laughs. It would take me weeks to explain that to you. But here s how we work - we have a group of underlying assets, namely the properties.
The five retail malls, two office buildings, and three hotels.
Correct. We rent these properties out to tenants, so you can say that we are landlords and property managers. When we get rental income, we distribute 90 percent of this to our unit holders in the form of dividends.
And the unit holder can be someone like me? you ask.
Absolutely. We raised money through an initial public offering. This means anyone can subscribe to our shares. All these funds are pooled into the REIT.
So I am a landlord too?
An indirect landlord, Robert says. But yes, you can say that.
An indirect landlord of five retail malls, two office buildings, and three hotels? Who wouldn t love a piece of the action? You re itching to invest. You re ready to take out your chequebook and sign along the dotted line.
But deep inside, you know that you still have no idea what you re doing. You don t know how a REIT really works. You don t know how many REITs there are. You don t even know how to begin thinking about which REIT to invest in!
Take a deep breath and calm down. If you don t know where to start, then start by turning to the next page. Within this very book are all the answers that beginners seeking to invest in REITs will need. With the determination to study it carefully, you re on your way to making these REITs work for you.
Unlike most books, we ve made it easy-to-read, without the use of complex terminology as far as possible. All necessary industry jargon are paired with easy definitions and thorough explanations. Unlike most books, this book goes beyond the REITs in just one country and provides an in-depth knowledge on the international REITs scene, namely on the United States, Hong Kong, Singapore, China and Malaysia. By the end of the book, you ll know about all of them.
Most importantly, exclusive real life case studies have been included. In the investing world, there are winners and losers. We don t want to just show you the glorified winners. These people may be good to emulate, but you re not there yet. Reading about Li Ka-shing or Warren Buffett all day won t turn you into them overnight. So get off your high horse and realise that you need to learn about yourself. To succeed, you need to know your weaknesses. Learning about the mistakes of others is helpful because you are not losing money on the market. Read about people who had put their money into the wrong REITs and have lost their savings. Where did they go wrong? How can you avoid making the mistakes that they did?
If you wish to learn how to invest in REITs the right way, take a step into the deep end and read on.
CHAPTER 1
KNOW YOUR INVESTMENT
Sun Tzu may have told you to know your enemy and your company may have told you to know your client . Like them, we re here to tell you to know your investment .
Have you eve