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REITs 101
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Moomoo SG joined discussion · May 23, 2022 21:45

REITs 101: A brief history of REITs

Hey, mooers! At the end of this post, there is a chance for you to win points!

Welcome to REITs 101, which will level up your REITs investment knowledge with our full educational REIT Investment.

The 1800s
In the 1800s, the wealthy in the US used trust structures (known as the Massachusetts Trust) to avoid double taxation. As trusts were not corporates, they did not attract corporate taxes as long as the income derived was distributed to their beneficiaries.

The 1930s
However, in the 1930s, the US Supreme Court ruled that trusts used as passive investment vehicles were not tax exempt and required to pay corporate taxes. Opponents of this tax rule lobbied for legislation for nearly 30 years to have this double taxation removed.

1960
One of the main provisions unique to the REIT Act was to classify REITs as pass-through entities to qualify them for tax exemption with the condition that it pays out at least 90% of their taxable income to shareholders in the form of dividends.
It is in response to the investment community's high demand for real estate funds.

As a result of this amendment, all investors were given equal opportunity to access and invest in large-scale, diversified property portfolios much like other liquid securities.

The first REITs in the 1960s were non-listed REITs such as Bradley Real Estate Investors, Continental Mortgage Investors, First Mortgage Investors, First Union Real Estate, Pennsylvania REIT, and Washington REIT.
REITs 101: A brief history of REITs
1965
In 1965, Continental Mortgage Investors, a mortgage REIT, became the first REIT listed on the New York Stock Exchange (NYSE).

1971
In 1971, Australia introduced Listed Property Trusts (LPTs), which were later renamed REITs in March 2008 to be consistent with international terminology.

2001
Japan was the first market in Asia to introduce REITs in December 2001. It has since grown to be the largest REIT market in Asia. REITs listed in Japan are known as J-REITs.

Singapore followed suit. Singaporean-based developer Capitaland attempted to launch Singapore's first REIT – SingMall Property Trust – in November 2001. The IPO was offered at S$1.00 per share and had a forecasted dividend yield of 5.75% and 6.05% for 2002 and 2003, respectively. The IPO was not well received and was subsequently scrapped due to a lack of investor awareness and poor interest.
Source: Barron's
Source: Barron's
2002
Capitaland had to restructure and rebrand SingMall Property Trust to make the REIT more attractive to investors as CapitaLand Mall Trust. With this effort, Capitaland finally listed the first S-REIT on the SGX in July 2002 with an attractive yield of 7.1%. CapitaMall Trust began with three malls, namely Junction 8, Tampines Mall, and Funan the IT Mall. In the same year, Ascendas REIT followed suit.

2005
Following the success of Japan and Singapore, Taiwan saw the launch of its first REIT in March 2005.

In Hong Kong, Link REIT's IPO was mooted in 2004 by the Hong Kong government by assembling various assets from the Hong Kong Housing Authority, including 151 shopping malls – mainly within public housing estates – and 79,000 parking spaces. After being listed, Link REIT would no longer require approval from the government to increase rents for new leases of its properties.

Hong Kong launched the Link REIT in November 2005, the first HK-REIT and the largest REIT IPO in the world at HK$22.2 billion (US$2.86 billion). Link REIT is currently the largest REIT in Asia in terms of market capitalization at HK$182.67 billion (US$23.28 billion).

2007
Europe was relatively slow to ride the rising Asian REITs trend. The United Kingdom (UK) laid the foundation for REITs in the Finance Act 2006, which came into effect in January 2007. Soon, nine UK property companies were converted to REIT status. Germany followed suit by enacting G-REIT laws in June 2007.

2019
India welcomed its first REIT listing in 2019 with Embassy Office Parks REIT, a joint venture of US private equity firm Blackstone Group and India-based real estate developer Embassy Group.

Other countries, such as China, are also considering and deliberating on the legislative frameworks for setting up REITs.

The rapid growth of REITs worldwide is a testament to its growing popularity and benefits to the investment community.
REITs 101: A brief history of REITs
Quick Test
After the above introduction, you should have some basic understanding of REITs history. Let's have a quick test. Mooers who get it right will get 50 points.
Hint: You can find the answer in this post!
The answer and winners will be revealed in the next post: What is a REIT. Winners will get 50 points, with which you can exchange gifts at Reward Club.

Thank you for reading and particiapting.

Disclaimer
Moomoo is a trading platform offered by Moomoo Inc. In Singapore, capital markets products and services on moomoo are offered by Futu Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS).

The content  is provided for educational & informational use only. The information and data used are for purposes of illustration only. No content herein shall be considered an offer, solicitation or recommendation for the purchase or sale of securities, futures, or other investment products. It does not take into account your investment objectives, financial situation or particular needs. All information and data, if any, are for reference only and past performance should not be viewed as an indicator of future results. It is not a guarantee for future results. Investments in stocks, options, ETFs, and other instruments are subject to risks, including possible loss of the amount invested. The value of investments may fluctuate and as a result, clients may lose the value of their investment. When trading in a margin account, a client may lose more than their original investment. Please consult your financial adviser as to the suitability of any investment.

This advertisement has not been reviewed by the Monetary Authority of Singapore.
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