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发表于 6-2-2015 12:09:37|来自：新加坡
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继续与姐共同学习Reits，共同提高！ 其实姐提出了一个很重要的问题，大家可能经常忽略的问题。一定要搞懂，搞通，争取做个明白的理财能手。 What are the benefits and risks of REITSAs with all investment products, it is important to weigh the risks and benefits and assess whether the product fits with your risk appetite and your overall financial plan.
Benefits of REITs
The unique characteristics and features of each REIT, such as its portfolio of assets and focus on generating income as regularly as possible, can translate into benefits for investors.
Diversification: REITs typically own multi-property portfolios with diversified tenant pools. This reduces the risk of relying on a single property and tenant which you face when you directly own a real estate property. For example, if the MRT station next to your apartment closes down, its value would probably fall. The impact of such “stand-alone” risk is diluted when you invest in a pool of properties through a REIT.
You could diversify further by selecting REITs based on the type of properties or region you want to invest in (Singapore listed REITs, or S-REITs have a diverse range of assets such as hotels, shopping malls, office buildings; in Singapore as well as other countries such as China).
Affordability: The REIT investor enjoys the advantage of the power of the pool of capital to acquire interests in much larger opportunities than would be available to their personal capital alone. For example, individual investor may not be able to afford a direct investment into a large asset such as Suntec City or shopping malls in China. By investing in a REIT, you get to invest in these large assets in bite-size chunks.
Liquidity: Compared to investing directly in real estate properties, REIT investment offers the advantage of liquidity – the ease of converting assets into cash. REITs are listed on the stock exchange and you can trade a REIT throughout the trading day, and it is easier to buy and sell a REIT than to buy and sell properties.
Tax Benefits: Individual investors enjoy a tax-exempt distribution which comes in the form of dividends in the REITs structure.
Transparency and Flexibility: The process of buying or selling a REIT is transparent and flexible, just like trading stocks listed on the exchange. Investors can access information on the REIT prices and trade REITs throughout the trading day. Moreover, there are a lot of external controls and monitoring of REITs, which increase transparency and corporate governance. For example, REITs are required to distribute at least 90% of taxable income each year to enjoy tax exempt status by IRAS (subject to certain conditions) .
See Table 1 for a comparison of features between investing in REITs and investing in property stocks.
Table 1: Comparison of features between REITs & Property Stocks
| REITs | Property Stocks | | Business Focus | Investment in income-generating properties | Generally property related, but may diversify into other unrelated activities or industries | | Safe Custody of Properties | Properties are held on trust by an independent trustee | Properties are held by the company | Dividend Policy
| Must pay out at least 90% of net income after tax | Subject to the decision of the board | | Investment and Leverage Guidelines | Subject to the Property Funds Appendix in the Code on Collective Investment Schemes | None | | Tax-Exempt Income (dividend) | Yes | No | | Traded Through Broker | Yes | Yes | | Management Fees | Yes | No | | Clearing Fees | Yes | Yes | | Brokerage Commission | Yes | Yes | | Settlement | Third Business Date after Trade Date | Third Business Date after Trade Date |
*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.
Risks of REITs
The risks associated with a REIT investment vary and depend on the unique characteristics and features of each REIT, as well as the geographical location of the investments. Do not simply look at the expected yield, but also consider the concentration, quality and lease length of the underlying properties.
Some of the risks associated with investing in REITs include:
Market Risk: REITs are traded on the stock exchange and the prices are subject to demand and supply conditions, just like other stocks. Investors could receive less than the original investment amount when they sell their units in a REIT. The prices generally reflect investors’ confidence in the economy, the property market and its returns, the REIT management, interest rates, and many other factors. Like other stocks, investors must be able to tolerate such price movements.
Income Risk: Dividends may not be paid if a REIT reports an operating loss. For example, tenancy agreements of the underlying properties could be renewed at a lower rental rate than the previous agreement or the occupancy rate could fall. You should consider whether the REIT has taken any measures such as procuring payment upfront or contractual lock-ins of rental rates and other clauses in tenancy agreements. Similarly, if the underlying properties are financed by debts, there is a refinancing risk when cost of debt varies. A higher cost of debt may also reduce the income distributions to unit holders.
Concentration Risk: If a substantial portion of the value of a REIT’s assets is derived from one or a few properties, you may be exposed to a greater risk of loss if something untoward should happen to one of these properties. Similarly, if a REIT depends on only a few tenants for its lease income, you are exposed to a greater risk of these tenants not being able to fulfill their lease obligations.
Liquidity Risk: Although investors are able to exit their investments easily by selling it on the exchange, the real estate fund itself may be relatively less liquid compared to funds investing in financial securities such as stocks and bonds. This is because it is difficult to quickly find buyers and sellers for property, especially if the value of the property is high. As a result, it may be difficult for REITs to vary their investment portfolio or sell its assets on short notice should there be adverse economic conditions or exceptional circumstances.
Leverage Risk: Where a REIT uses debt to finance the acquisition of underlying properties, there is leverage risk. As is the case with other listed companies, in the event of an insolvency of the REIT, the assets of the REIT will be used to pay off debtors first. Any remaining value will then be distributed to unit holders.
Refinancing Risk: As REITs distribute a large amount of their income to unit holders, they may not have the ability to build up cash reserves to repay loans as they fall due. Thus they will typically seek financing by entering into new borrowing agreements, or other capitalization measures such as rights or bond issues. One potential risk is higher refinancing cost when loans are due for renewal. Another risk is that a REIT which is unable to secure refinancing may be required to sell off some properties if they are mortgaged under the loan. These risks could affect the unit price and income distribution of a REIT.
Other Risks: While some REITS can offer diversity based on the type of properties or region you want to invest in, such diversification could carry other risks such as sector and country regulation risk.
ConclusionAs with any other investment product, investors should also take time to understand the product and consider whether it is suitable for them. Here are a few key things you should check before deciding whether to invest in a REIT.
i) What does the REIT invest in?
Do not assume that all REITs come with low risks and are intended for long term investing. Read your prospectus and research reports to understand these key areas:
- the sector and geography factor (in particular the stage of property cycle in the assets’ home countries, the economic outlook for that country, any political or regulatory risk, any tax considerations); and
- the underlying assets (in particular the asset quality, such as branding of a shopping mall, occupancy rate and the tenant mix).
ii) How is the REIT structured?
Read the “Investment Approach” and “Risks” portions of your prospectus for information on the various risks of the specific REIT you intend to invest in. Note that the risk elements may differ greatly between REITs depending on their structure.
Do also find out:
- Who are the people managing the underlying assets? For example, the management quality, such as its reputation and track record, its strategy for growth.
- If there is a sponsor, who is the sponsor and what is the strength of the sponsor?
- What are the expected fees (i.e. brokerage commission, management fees, trustees’ fees & expense ratio)?
- What is the gearing (leverage) and debt maturity of the REIT?
- Are there unique features of the specific REIT which may give rise to additional risk?
iii) What is the dividend distribution policy?
Find out:
- What is the expected frequency and timing of dividend payment?
- What are the adjustments made to income in determining the amount to be distributed?
- What are the circumstances under which a REIT may not pay dividends, e.g. an operating loss, downward revaluation of properties, or insufficient cashflow?
iv) Does the REIT’s structure and risk profile suit your risk appetite and investment time horizon?
v) How does the REIT you are considering compare with other investment options?
Last but not least, if you find that you do not understand the REIT or are not comfortable with its structure and risks, do not invest in it.
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