Benefits of REIT
Owners of Property
Owners may raise capital from real estate that is already generating revenue and use that capital to invest and/or develop new projects.
- Smaller investment is required than to directly invest in real estate.
- Greater confidence in management under the management of real estate experts.
- Offer variety of ways to invest in real estate.
- Able to invest in varied types of real estate, including real estate abroad;
- Able to use leverage to invest and/or develop real estate for higher returns.
- Able to partially develop its own real estate.
- Allow a company with expertise in managing real estate to become REIT Manager.
- Adheres to international standard.
Types of the REIT Investment
The REIT may choose between two types of investment types:
- Direct investment by acquiring/obtaining ownership in the real estate (Freehold or Leasehold).
- Indirect investment by investing through a company which the REIT holds ≥ 99% of the total shares. A system must be in place to ensure that such company complies with rules similar to those of the REIT.
Types of Real estate for the REIT Investment
The REIT will be managed for investing in all types of real estate, but it must not be an immoral or illegal business, and it’s also allowed for investing in any oversea real estate.
There are 5 types of real estate in Thailand which the REIT always invest;
Investing in rental office buildings, it can be high office buildings till small office buildings. Rental cost will be based on the quality of each office building, location and its facilities that will fulfil the tenant’s needs, and also the access of massive transportation systems.
Investing in retails real estate is managed for large shopping malls located in business centers, and medium- small sized community malls. Rental income is derived from the leasing of commercial spaces for customers who do a retail business and varied services. Recruiting anchor tenant to rent the largest space is focused in order to increase the high income and build a great reputation of that real estate.
Industrial Real estate
Investing in industrial real estate is managed for relevant manufacturing, storage, and distribution center, or E-Commerce distribution center. Rental income will be regularly generated. This type of real estate is normally located outside business center as a large area is required for machinery installation, storage, and product handling conveyors. It must be easily accessed by comfortable transportations, and also conveniently reached by land, air and water transports.
Investing in exhibition and convention centers is managed in order to generate income from leasing real estate or sharing spaces with clients.
Investing in hotels and resorts is managed by leasing the real estate to a master lessee who will benefit from those real estate, and then pay the rental fees. Both fixed rent and variable rent will be calculated based on the concerned agreement and conditions in order to create the best profit for both parties.
Assets for the REIT Investment is can be managed for investing in more than one type of real estate that are related and supported by each other, for instance, investment in office buildings and retails, or investment in retails and hospitalities.
For generating income from real estate investment, the REIT must create the best return on rental real estate by not being its business operator, such as hotels or hospital activities, and the tenants must not use the real estate for doing any immoral and illegal business.