Real estate investment trusts (“REITs”) have been
around for more than fifty years. Congress established
REITs in 1960 to allow individual investors to invest
in large-scale, income-producing real estate. REITs
provide a way for individual investors to earn a share
of the income produced through commercial real
estate ownership – without actually having to go out
and buy commercial real estate.
What is a REIT?
A REIT, generally, is a company that owns – and
typically operates – income-producing real estate or
real estate-related assets.
These guidelines specify standard appraisal procedures for Japanese real
estate appraisers (the only profession that is licensed and registered by the
government by law. Hereinafter “Japanese Appraisers”) to appraise overseas
real estate for investment purposes.
As the globalization of the real estate market progresses, cross-border real
estate investment is gaining momentum. In addition, real estate investment
trust (REIT) markets have been set up in the past few years, and
international competition in real estate markets is heightening rapidly....
In this chapter, the following content will be discussed: Risk management as practiced today in real estate; efficiency of markets for houses, commercial real estate; real Estate Investment Trusts and existing other institutions; new institutions: Home equity insurance, housing partnerships, SAMs, Macro securities.
It usually looks at cash flow during the hold period of the investment plus the cash flow resulting
from the ultimate disposition of the investment property.
In these respects it is different from and more sophisticated than Tool Kit #2 Direct
Capitalization, which usually limits its focus to annual net incomes without taking into account
cash flow, appreciation in value, paying down of mortgages, or ultimate cash flow on
Several filers cited subjects for providing misleading information about real estate
securities or securitized commercial mortgages. One filer cited a former Chief
Executive Officer (CEO) for failing to disclose investment risks in certain CDOs,
CMOs and trust preferred securities. The CEO had managed the investment
portfolio, supposedly with a “very high” rate of return, and received large bonus
payments. Later, the filer determined the CEO had misled bank management about
If you’re an absentee landlord — or just too busy to handle maintenance — a property manager
may be a good solution. This third-party manager runs the place, does the bookkeeping, scouts
out the best repair people, and takes those 3 a.m. phone calls. In addition, the manager collects
monthly rents and even leases the property for you. While they remove all the burdens from your
shoulders, they come at a price. You can expect to pay 5% to 10% of your gross income, and
even more if additional services are performed.
Many foreign companies use a combination of exporting, licensing and direct investment in India.
India permits 100% foreign equity in most industries. Units setting up in special economic zones
(SEZs), operating in electronic hardware or software technology parks or operating as 100%
export-oriented units also may be fully foreign-owned. Nevertheless, the government has set
sector-specific caps on foreign equity in certain industries, such as basic and cellular
telecommunications services, banking, civil aviation and retail trading.
There is one reported proposed entry – of
Schroder Investment Management through
the acquisition of a significant minority stake
in an existing AMCor trust company and also
one reported proposed exit, viz. Fidelity
This growth serves to demonstrate that,
at a fundamental level, there are many
significant global and local players that
consider the Indian mutual fund industry
to be attractive. It is necessary to
understand the mix of investors, distributors,
types and number of schemes as factors that
contribute to a sustainable and profitable
An investment property offers a unique option: you can buy one virtually anywhere. If you’re
comfortable being an absentee landlord, you can actually own a home thousands of miles away
and have a team of specialists manage your property. But most investors opt to be more involved
than that, buying properties closer to home. An NAR study of investment home purchases shows
the median distance to be 99 miles from the owner’s primary residence, with 37% located less
than 25 miles away.
In view of risks described and the generally rather complex trends of the
relevant markets, a well-informed investor is a prerequisite for an investment in
real assets. For example, the selection and management of a real asset portfolio
necessitates extensive knowledge of the markets concerned and, in some
circumstances, operative capabilities. From the investor’s point of view, lack of
expertise is often a barrier to the choice of appropriate investments.
“ as a founding member of Greenprint,
RREEF Real Estate has and continues
to play a leadership role in defining the
metrics that Greenprint will collect in
future reporting rounds, and how the
reporting process can be increasingly
automated, transparent, and
compatible with the established set of
portfolio management tools widely used
in the commercial real estate industry.”
Social sustainability tends to be viewed as the ‘softer – politically correct’ component of
sustainable development. This is a poor, yet widely-held misreading of the very tangible
benefits social sustainability can bring to a real estate, or as is the focus here, investment in
real estate. Much greater clarity of the influence of social sustainability in what is all too often
a short-term focus on quick returns on is urgently required.
The first aspect, the tax exemption, has been highly controversially disputed, as it
privileges the REIT company towards other company forms. The BMF considers
the REIT necessary to preserve Germany’s competitiveness on international
financial markets and to maintain jobs for highly skilled employees.
The topic of real assets is currently being intensively discussed in the media and
among investors. The turbulence in the financial markets since the start of the
subprime crisis in 2007, together with latent worries about inflation resulting from
unorthodox financial policies, mean that investors are looking for alternatives to
investments in stocks or bonds. Preservation of capital has taken on a new
significance. Gold has benefitted from this in the last few years.
In this issue, we present a number of interesting articles that hew closely to that
theme. Our analysis has uncovered important information concerning commercial
real estate investment vehicles and how they may be misused for criminal gain.
Also, we have looked into burgeoning trends in debt relief scams that may affect
your business and your customers. The SARs that have been filed concerning those
activities, while they report local activity, have national import and serve to protect
your business from losses and your customers from predation. ...
Terminology related to commercial real estate investment products varies widely
and is often unclear due to the complexity of the instruments. For purposes of this
report, FinCEN used the following working definitions.
, which came into formal existence in the 1960s due to tax law changes4
entities that typically own multiple commercial properties, often focused in one
sector of the commercial real estate market. Institutional and individual investors
can purchase REIT shares in the public market or in private offerings.
CMBS have existed since the mid-1990s.
Abnormal profits (or the lack thereof) for mutual funds in the stock market have been studied
extensively in the literature (see e.g. Jensen (1968, 1969), Brown and Goetzmann (1995), Gruber
(1996), Carhart (1997)). The common theme that emerges from these studies is that true riskadjusted
abnormal profits are rare in stock portfolios held by mutual funds, and when found, such
profits lack persistence.
It is very important to make a distinction between the way that an investor records invest-
ments in its books and the way that the investment is reported in the investor’s financial
statements. We’re already seen that reporting may involve cost, fair value, equity, consoli-
dation, or proportionate consolidation. Often, an investor will account for a strategic
investment by using the cost method during the year simply because it is the easiest method;
this is the investor’s recording method.
Second, our findings contribute to an emerging discussion in the
real estate literature on the choice of portfolio specialization. To date, existing work has focused
primarily on geographic diversification (see e.g. Hartzell, Sun and Titman (2010)). Our findings
shed additional light on the importance of portfolio manager specialization in this industry. Finally,
our work provides additional empirical support for the importance of financial intermediation in the
gathering of specialized knowledge and efficiencies.