Real Estate Investment Trust ?????????

1
Real Estate Investment Trust?????????
Wong Yee Han, Roni (043102) Tsang Pui Yee,
Polly (043112) Kwok Chi Keung, Rex
(043126) Yeung Tat Chung, Angus (043097)
2
Agenda

• Introduction of REIT
• Example of REIT The Link
• Comparison of different REIT in HK
• Evaluation and Recommendations
• Conclusion

Roni Wong
3

• Introduction of REIT

Roni Wong
4
What is Real Estate Investment trust (REIT)?

• collective investment scheme in a portfolio of
  income-generating real property
• Manager distributes all / almost of net income?
  holders
• Annual or semi-annual basis

Roni Wong
5
What is Real Estate Investment trust (REIT)?
(cont)

• Investor buy / sell through a stock exchange
• REIT do not redeem investors interests
• Long term income yield
• not for capital appreciation on resale

Roni Wong
6
Advantages

• Realize and redeploy capital investment
• ? asset become more liquidate
• Regular income
• Invest in an asset class
• which is difficult to access
• Remove double taxation

Roni Wong
7
Example of REIT The Link
???????????
Polly Tsang
8
Background

• Stock code 823
• invests in 180 retail and carpark facilities
• one million sq.m of retail space and around
  80,000 carpark spaces
• 40 of people lived near the Link REIT properties

Polly Tsang
9
Polly Tsang
10
Investment strategies

• invest in properties for the long-term
• focus on sustainable-income producing properties
  with the potential for long-term income and
  capital growth
• maintain a large and geographically diversified
  portfolio

Polly Tsang
11
Investment strategies (cont)

• convenience-based retail properties primarily
  serving the basic consumer needs of the residents
  of the adjacent housing estates and other
  visitors
• carparks serving the tenants and customers of the
  retail properties and the residents of the
  surrounding
• neighborhoods and other visitors

Polly Tsang
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Dividend Distribution

• no less than 90 of total distributable income
• not less than HK0.6176
• 21 December 2006 - 32.81 HK cents
• 30 August 2006 - 21.81 HK cents

Polly Tsang
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Advantages

• Certainty as to business focus
• A policy to distribute of an amount equivalent to
  100 of total distributable income
• Financial and operating transparency

Polly Tsang
14
Comparison of different REITs in Hong Kong

• Link REIT(??????,823)
• Gzi REIT(????????,405)
• Champion REIT(??????,2778)
• Prosperity REIT(??????,808)

Rex Kwok
15

• Link REIT--- invests in 180 retail and
  carparks facilities

Rex Kwok
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• With an Internal Floor Area ("IFA") of
  approximately one million sq.m of retail space
  and around 80,000 carparks spaces
• the properties are on the doorstep to 40 of
  Hong Kong's seven-million populations.

Rex Kwok
17

• Gzi REIT---consists of commercial properties
  located in Guangzhou
• 1.White Horse Units
• 2.Fortune Plaza Units
• 3.City Development Plaza Units
• 4.Victory Plaza Units

Rex Kwok
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• The overall occupancy of the 4 properties
  improved to over 90
• White Horse Building is maintained at 100
• Fortune Plaza at approximately 90.2
• City Development Plaza at approximately 92.6
• Victory Plaza at 100

Rex Kwok
19

• Champion REIT---formed primarily to office and
  retail properties in Hong Kong
• Comprises 91.5 of the Gross Rentable Area of
  Citibank Plaza and substantially all of the
  parking spaces at Citibank Plaza.

Rex Kwok
20

• Citibank Plaza comprises Citibank Tower a
  47-storey building and ICBC Tower a 37-storey
  building and includes a retail podium and a
  carpark
• It is hub of banking and financial activities in
  the Central District

Rex Kwok
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• Prosperity REIT---own a high quality portfolio of
  seven
• Hong Kong commercial properties

Rex Kwok
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• Comprising three Grade A office buildings in
  decentralized business districts
• A portion of three industrial/office buildings
• A portion of one industrial building

Rex Kwok
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Discussion

• According to their different portfolio of
  properties, which REITs will you subscribe and
  why?

Rex Kwok
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Evaluation and Recommendations
Angus Yeung
25
Evaluation

• Market scale is large
• Low quality of capital
• Underdeveloped supervision structure
• Lack of experience of fund managers
• Unclear investment strategies

Angus Yeung
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Recommendations

• Redevelop the assets
• (Shopping mall, Carparks, Estates)
• ? Capital quality and rent level of private
  properties
• Human resources management
• ? Training and learning from other countries
  (eg, USA, Singapore)

Angus Yeung
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Recommendations (cont)

• Investment strategies
• For business
• Focus on SME or large companies
• Benefit to properties
• Adjust the interest rate

Angus Yeung
28
Conclusion

• REIT will become more popular
• The market scale will
• increase to 60
• Active in financial market

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• Q A

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• THE END