Internet update

Citation

Almond, N. (2005), "Internet update", Property Management, Vol. 23 No. 1. https://doi.org/10.1108/pm.2005.11323aag.001

Internet update

In the 2004 Budget in the UK, the Government issued a consultation paper seeking views on the introduction of a Real Estate Investment Trust (REIT) style vehicle in the UK, similar to those already in existence in countries such as the USA, Australia and, more recently, France. In simple terms REITs are tax transparent vehicles which own/operate income-producing property which distributes a proportion of its taxable income to investors/shareholders in the form of dividends. The following link www.nareit.com/portfoliomag/03sepoct/table.shtml provides an overview of the tax treatment and income rules for REITs across the globe and is a useful comparison for the structures in different countries.

REITs are not just an investment issue. There is also a management perspective, with debate in other countries as to whether they should be internally or externally managed. Analysis of the market shows that in markets which have REITs, there is not one clear formula for the structure of such vehicles, or the nature of management. However, for the purpose of this editorial I have highlighted various resources that are available on the web on a broad level, though highlighting where management issues are raised.

In the USA, the main body of information can be obtained from the National Association of Real Estate Investment Trusts (NAREIT). Their web site (www.nareit.com) has recently been revised, providing a fresh and improved interface. For the novice there is a lot of information available, providing not only some basic information on REITs, but also performance data and the structure of the current marketplace. Certain sectors of the web site are, however, restricted to subscribers of information, where it has greater value, this includes, for example, some of the performance data.

Of that freely available, the “Investing in REITs” section is perhaps the starting point, and taking this link, you are directed to a separate web site – www.investinreits.com In this site, the “Learn about REITs” section provides access to a 12-page guide to REITs. The document covers some of the basics, such as what REITs are, and their typical structure. Issues such as historic performance, transparency and comparisons with other asset classes is also contained within the document. Within this section there is also a glossary of frequently used terms, which is particularly useful given that in different countries, different types of performance measurement can be used.

The “Newsroom” section provides all the latest news relevant to the REIT sector. One of the most recently released notices relates to new legislation that has been enacted on the REIT sector. One of the changes impacts on distributions to foreign investors, so it may be of interest to the wider community. The newsroom also provides charts and tables on current performance compared to other types of assets, plus links to the data library, though be warned, it may take a few clicks before you get to the information you require!

In the USA there is also a wealth of more “academic” literature. The American Real Estate Society (www.aresnet.org), provides a link to its journal – the Journal of Real Estate Research. Taking the special issues link highlights a number of past issues which have covered the subject of REITs. For example, in 1995, two issues covered the subject, and by browsing the list of journals it is possible to gain access to the papers themselves. Volume 10, issue 3, for example, had an article on the issue of management, in particular, it considered if there were differences between internal or external structures.

Outside of the USA, the Australian market is also considered as having a mature REIT market. Here REITs are know as Listed Property Trusts (LPTs) and there are a number of bodies who produce information on this sector of the market. The initial starting point is the Australian Stock Exchange, www.asx.com.au, where there is a specific page devoted to the LPT sector. The following link should take you to this information (www.asx.com.au/markets/13/propertytrusts_am3.shtm), however, from my own personal experience you need to type “LPT” in the search engine and find the page from the results listed – a quirk of the internet, not the ASX, I hasten to add. The most useful section is the links to other sites or documents. This includes a short fact sheet describing what LPTs are; there are also links to an array of performance data, including comparisons with other asset classes.

The site also allows you to view or download the BDO Listed Property Trust Survey for 2004. As the document is over two megabytes it is recommended to access using a broadband link, unless you are happy waiting half an hour for the document to download! For those with a real interest in LPTs this is a useful document providing some historic information on the growth of the sector, splits by property type, levels of gearing and the ranking of trusts on different measures such as returns on investment and management expenses. At nearly 100 pages, this is not for the light hearted!

The ASX web site also provides a glossary of terms produced by Property Investment Research, an independent research organisation (www.pir.com.au). Again, as this organisation monitors the market, not all parts of the site are freely available. Nevertheless, there is a small amount of useful information to view. In particular, the size of the market, in terms of value and property sector splits (this is also updated on a fairly regular basis). There is some historical performance data and the latest news impacting on the sector, including the latest in take-overs, which is a feature of the market at present.

Another site worth visiting for general news is www.propertyoz.com.au While information is not readily available, I decided to take the link to the capital markets section, and then chose to search the site using the term “LPT”. This resulted in links to 50 documents, which were mostly news releases or short articles on different aspects of the LPT market. If you want to look at a specific aspect of this sector, it’s worth a go – I have found this of use in the past.

As REITs become an emerging sector, so the level of information increases. For those with little knowledge it is always worthwhile using one of the search engines on the web to find information. Table I lists some of the names of different REIT structures across the globe – if you want more information, why not type in the full name or just the acronym and then sift through the hundreds of results that appear.

Country	Structure	Acronym
USA	Real Estate Investment Trust	REIT
Australia	Listed Property Trust	LPT
France	Sociétés d'investissements immobiliers cotées	SIIC
Belgium	Sociétés d'investissements immobiliers á capital fixe	SICAFI
The Netherlands	Fiscale Beleggingsinstellingen	FBI
Japan	Japanese Real Estate Investment Trust	J-REIT

Table I Different REIT structures across the globe

As a postscript, you will have noticed that I have not provided any information on UK REITs – in part because they are not yet around. At the time of writing, progress on their introduction has not advanced much, though some announcement could be made in the pre-budget speech, December 2004 (which will be before this has been published). It is therefore worthwhile keeping tabs on the HM Treasury web site (www.hm-treasury.gov.uk), or even taking a look at the Royal Institution of Chartered Surveyors site (www.rics.org.uk) or Investment Property Forum site (www.ipf.org.uk) for any updates or responses to the UK Government – happy surfing!

Acknowledgements

The views expressed are those of the author and not those of Jones Lang LaSalle.

Nigel AlmondSenior Researcher, Jones Lang LaSalleE-mail: nigel.almond@eu.joneslanglasalle.com