What Is a Private REIT?

Real Estate Investment Trusts, REITs (real estate investment trusts) is a method of collecting funds from specific investors by issuing income vouchers. Real estate investment operations are managed by specialized investment institutions and the comprehensive investment income is distributed to investors in proportion. A type of trust fund. Unlike China's trust, which is purely private equity, REITs in the international sense are equivalent to funds in nature. A few belong to private equity, but the vast majority belong to public equity. REITs can be operated in a closed or listed form, similar to China's open-end funds and closed-end funds.

Real estate investment trust

Discounts on REITs

From the preferences and requirements for REITs, we can see that the government vigorously supports its development, regulates its operations, uses it to develop and stabilize the real estate market, and restricts its monopoly market, prevents it from abusing operating income, and limits It interferes with the purpose of operating other entities. If REITs have a high percentage each year

There are three types of REITs: equity-based REITs, mortgage-based REITs, and hybrid REITs.

Equity REITs

Owning and operating income-generating real estate, with businesses including rental, development and tenant services

Mortgage REITs

Loans directly to real estate owners and operators, or through acquisition loans and

There are approximately 300 REITs in the United States, with total assets of more than $ 300 billion, and about two-thirds are listed on national stock exchanges. Some REITs are not listed, but REITs are generally listed. The development of REITs The concept of REITs dates back to 1880.

In 1960, Congress established REITs to enable small investors to invest in large-scale, yield-based real estate. Congress considers enabling average investors to invest in large

Real estate investment must be borrowed in large quantities, partly because of its huge investment amount, and partly because investors must use financial leverage to obtain better returns on equity investment. Interest can be deducted from the taxable amount, and the huge interest of real estate investment can play a role of tax avoidance. The depreciation amount can also be deducted from the taxable amount. The extension of the depreciation period reduces the annual depreciation amount, increases the taxable amount, and reduces the tax avoidance effect of real estate. Inactive activities refer to investments with a relatively low level of participation. Many people invest in real estate without spending much time and energy (such as only 20%) to participate in operations and management. Such investments are classified as inactive investments. Losses from a non-active investment activity can sometimes be used to offset the taxable amount of active investment and other non-active investments. In short, the book loss of real estate investment can serve as a tax avoidance. The Tax Reform Act of 1986 is nothing more than a reduction of this effect. The vitality of REITs is that tax incentives are an important reason why REITs are superior to other real estate operating companies. Among listed real estate companies, the number and scale of REITs far exceed the average real estate companies. The total assets of REITs are about $ 300 billion, while REOCs are about 30 billion. It has some inherent advantages of listed companies, such as economies of scale, standardized management, high transparency, professional management, popularization of equity, democratic management, and the ability to absorb funds from many small investors. Almost all top companies in various industries in the world are listed companies. Realizable. REITs give very poor real estate investment with good equity liquidity, which is another type of "securitization" in addition to mortgage securitization.