Download related file: REIT-45-
PDF file attached.
Investors looking to diversify away from straight equity can invest in property as an alternative via direct investment, or by investing in units of listed or unlisted real estate investment trusts (REIT) or the shares of property developers.
Typically a REIT will purchase a number of similar properties, maintain those properties and collect rent from tenants, and pay a distribution (dividend) to the unit holder net of maintenance costs and management fees. REITs are primarily attractive to investors for their dividend yield but also offer capital upside on property value appreciation. The bulk of listed REITs fall into three property categories: office, being office blocks usually in a CBD; retail, being shops and shopping centres; and industrial, being warehouses, logistics centres and so forth. Other variations exist.
Property developers typically purchase land, build office, retail, industrial or residential complexes, and sell those properties. Developers offer a higher risk/reward investment than REITs given the lag time between construction and sale, and the capital committed to a project. Dividend yields are typically lower but capital up/downside typically greater.
The tables in the attached PDF list Australian REITs and developers and and calculations for dividend yield and valuation, including share price to earnings, price to net asset value (market value of property) and price to book value (property valuation on the company’s/trust’s books) for the purpose of investor assessment.