Investor Information

Investor Information - The Asset Class

 

The listed global real estate sector encompasses securities issued by real estate companies, these include Real Estate Investment Trusts (REITs) and other entities such as Real Estate Operating Companies (REOCs), and real estate development companies. Global Real Estate securities provide a way to invest in companies that own properties such as shopping malls, office buildings, apartments, warehouses, medical facilities, data centres, and even timber and farmland across the globe.

Approximately 75% of the companies in the global real estate market are REITs, and this corporate structure provides a tax-efficient means of distributing rental income to shareholders.

The United States has provided the majority of investment opportunities for REITs and listed real estate companies, but presently over thirty-nine countries have REIT-type structures and listed real estate companies operate in almost every global market. The latest market to adopt a REIT structure was Portugal in February 2019 with its Sociedades de Investimento e Gestão Imobiliária (SIGIs). South Africa adopted its REIT structure in 2013.

In the USA to qualify as a REIT, the company must operate in the real estate business. It must invest at least 75% of its total assets in qualifying real estate assets and derive at least 75% of its gross income from rentals from physical property or interest on mortgages on physical property. In addition, a REIT must distribute annually to its shareholders at least 90% of its taxable income in the form of distributions/dividends. South African REITs are required to own at least R300 million of property; earn 75% of their income from rental or from property owned or investment income from indirect property ownership; and pay out at least 75% of its taxable earnings available for distribution to its investors each year.

The global listed property market has continued to expand and now constitute over a thousand listed companies with a total market capitalisation of over US$2 trillion.