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@Florida

the REITs unit today might behave more like small cap stocks

rounder(over the hump)
Risks related to REIT can be:

1. REIT often invest in a particular type of real estate, for example there are REITs in residential buildings or warehouses. The rental market of that type of property can fluctuate. For instance, in 2002 the vacancy rate of apartment buildings in some major US metro area declined quite a bit because people are buying houses and moving out of rental home. This will affect the revenue of the REIT that holds such property.

2. More importantly, many people don't realize that most of REIT are leveraged, which means the Trust borrows money to invest in those properties. The interest rate is at record low now. If it starts to climb up, the financing cost of those REITs will shoot up, which means they will have less cash to distribute to unit holders.

In conclusion, the REIT unit today might behave more like small cap stocks. This is quite different from a novice investor's impression that "return from real estate investment is steady".
(#1027133@0)
Last Updated: 2003-2-7
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Replies, comments and Discussions:

  • 枫下家园 / 理财投资税务 / 最近看了一本书，讲REIT（real estate investment trusts)，说REIT如何如何好，是个风险低，回报高的好投资，请教一下各位DX，能否给些指点，是否可以投在REIT上，谢谢！ -j.c(J.C); 2003-2-7 (#1026921@0)
    • 作好了在大学附近一年50% -abracadabra(Just do it); 2003-2-7 (#1026922@0)
    • FYI -diao_david(大卫。刁); 2003-2-7 {766} (#1026942@0)
      Real Estate Investment Trusts (REITs): Resembling a closed-end mutual fund, REITs are formed to invest funds in a portfolio of commercial mortgages and other commercial real estate related investments (usually income properties such as retail, industry and office buildings). They issue trust units that provide small investors with the opportunity to share in the earnings of a portfolio of real estate products. The Income Tax Act exempts the trust from paying income tax on any earned income paid out to shareholders. Income tax is paid on any earnings that are retained by the trust. Dividends received from REITs however, do not qualify for the dividend tax credit. Trust units are listed and traded on a stock exchange as are shares of closed end mutual funds.
    • Borrow money to invest in REIT is not a good choice because it has liquidity risk. -bh_zhang(Babyboomer); 2003-2-7 {159} (#1026994@0)
      However, it is good investment to generate continuous cash flow. But, some said there is a bubble now. Do a research and tell us whether it is good or bad now.
    • 回报有多高? 请说说. -1499728inc(bank); 2003-2-7 (#1027033@0)
      • 在这个坛子里找了半天好像没有关于REIT的帖子，真的不知道是否是个好的投资选择，哪位大虾给指点指点？谢谢！ -j.c(J.C); 2003-2-7 (#1027973@0)
    • the REITs unit today might behave more like small cap stocks -rounder(over the hump); 2003-2-7 {994} (#1027133@0)
      Risks related to REIT can be:

      1. REIT often invest in a particular type of real estate, for example there are REITs in residential buildings or warehouses. The rental market of that type of property can fluctuate. For instance, in 2002 the vacancy rate of apartment buildings in some major US metro area declined quite a bit because people are buying houses and moving out of rental home. This will affect the revenue of the REIT that holds such property.

      2. More importantly, many people don't realize that most of REIT are leveraged, which means the Trust borrows money to invest in those properties. The interest rate is at record low now. If it starts to climb up, the financing cost of those REITs will shoot up, which means they will have less cash to distribute to unit holders.

      In conclusion, the REIT unit today might behave more like small cap stocks. This is quite different from a novice investor's impression that "return from real estate investment is steady".
    • 从收益上说，REIT类似于Fix Income.从风险上说，它的风险并不低。目前来说，由于存在利率上升的趋势，所以REIT的中长期回报并不看好。如果有兴趣，你可以自己去找一些 investment trusts的Portfolio来看，我最近关注 -jianghongca(慎独); 2003-2-7 {152} (#1028057@0)
      的几个都在持续降低所持有的REIT的比例，转向Business investment Co.

      在MUTUAL FUND的范畴中，也有Real Estate Fund,属于比Equity Fund更加高风险的FUND产品。
      • Thanks a lot! -j.c(J.C); 2003-2-8 (#1028487@0)
    • REITs 前几年的却横风光，但在下认为现在再买已不明智，应为冲根本上说，它取决于地产市道，后者已显疲态。 -sheepsheep(捣把浆糊); 2003-2-8 (#1028500@0)
      • 对 -bbbb(鞭炮薄饼--过年啦); 2003-2-8 (#1028633@0)

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