Real Estate Investment Trust

The diagram above shows an example and explain the concept of REIT. In this case, we use KLCC as an example, but in reality, KLCC is not under REIT.

When you buy REIT, you are consider as owner of the building. This fund, hire a management team to manage this building.

Duty of Building Management include:
1. Maintain the building
2. Rent out the space
3. Collect Rental from tenant

REIT is different from other stocks, they have a policy that; REIT MUST pay out 80-90% of the rental profit (rental – management fee) to all share holder in dividend through period of time (quarterly, half yearly, or yearly).

Owning a REIT is like owning a part of the building.

Benefit of REIT
1. Stable; having a property as the Main Asset Value
2. Still under value (most of the REIT in Malaysia still 30% under of its NAV)
3. High cash flow return (around 8% for commercial REIT, eg Amfirst, Axreit, Stareit)
4. Easy to quit compare to buying an Property
5. Low commission fee compare to Mutual Fund (just need to pay broker fee as normal share trading)