REAL ESTATE INVESTMENT TRUST (REIT) - BY NIK ZAFRI
I've noticed these few days that major corporations in Malaysia are racing into Real Estate Investment Trust (REIT) - or is it M-Reit? (Whatever...)
Is it safe to say that this a sign of real estate and development industry in Malaysia may have successfully prevented the 'sup-prime mortgage crisis' from hitting Malaysia? Fascinating...
Well to start with, from 2007-2008, I've noticed profit from rental income were being distributed in form of dividend to its holders. Well, I think this also has something to do with the pivotal role played by Security Commission issuing guidelines on property trust funds - making more and more REIT companies listed in Bursa Malaysia.
But, the norms are happening again, I went to this small coffee shop known only as 'Peter' in Taman Sri Gombak near the place I'm staying and asked around 'MIC' (mind you - it's Malays, Indians and Chinese) on REIT. Only one or two answered correctly but the rest blinked at me and replied :
"Huh? What? Unit Trust?"
Once again, I think information is not well-disseminated. No wonder new establishments (newly completed office buildings) nearby are not being rented yet.
Well, I'm going to do my bit now...information dissemination :
To start with,
a) REIT is different from Unit Trust
b) REIT works like stock-trading in Bursa Malaysia...giving investors returns via capital appreciation from dividends and change of price... (aaaah, some of "MICs" said and nodded their head in agreement) -
c) REIT's benchmark is on Market Demand & Supply to ascertain its' stock price (Unit Trust is on NAV - value of its assets less liabilities & calculated daily by unit trust companies)
d) you can buy from remisiers/stockbrokers as well but NOT Unit Trust Agents and Banks (so be careful)
f) There is equity REIT (the common one), mortgage REIT (a bit complex - profit based on mortgage loans after procuring mortgage backed securities) - Well you can also go for both,
e) Yes...based on regulations or tax incentives, at least 90% taxable profit of REIT goes away as dividends. (Non-Residents are subject to approximately 30% tax - I think...)
f) high yield
g) If you're not sure, start with small investment
h) Eye for good & strategic places for assured Return of Investment (this is important!!)
i) Don't worry about fluctuations - do a lot of reading on REIT.
And most important, ASK AROUND or ASK the information counter where you're buying.