Introduction:
Real estate can be broken down into three categories based on the risk profile of the asset. These are personal properties, investment properties and infrastructure properties. Properties falling in the third category are not usually invested in by the private sector in India.
Real estate needs to be analyzed physically as well as in terms of the legal rights and responsibilities. Valuation of properties can be done either as sum of the parts (land plus building) or a comparison with other properties in the area or on the basis of the ability to generate revenue streams.
Professional management attempts to limit the risks in real estate investment. Factors such as expertise in legal issues, knowledge of current trend in property markets, ability to maintain properties are some of the advantages of professional management.
Real estate schemes provide exposure to the property market through small investments, they provide professional management, thus reducing the risks involved and also brings in the much-desired liquidity for the investors. Indian mutual funds have been given certain tax concessions and investors can benefit from them.
Real Estate Investment Trusts (REITs) have been in existence in the United States of America for the past several decades making there way into global market. REITs own income producing real estate and enjoy special tax status on confirming to certain stipulations.
While the first REIT was established in 1960, the real impetus to the industry came after an amendment in the tax laws in 1986, conferring special tax status to REITs. REITs were also allowed greater freedom to operate and manage real estate, at around the same time.
REITs became a popular way of accessing the capital markets during the early 1990's when property values dropped between 30 and 50 percent. On the other hand, investors, finding value in commercial properties found REITs a convenient way of gaining exposure to that market.
REITs appear to be here to stay, primarily due to the structure providing liquidity to investors, the higher sense of security accompanying professional management and a good performance logged in by the REIT industry.
REITs differ from Indian Mutual funds in respect of the structure being that of a company, ability to raise money through debt and preference capital, being exclusively close ended and the need to distribute at least 95 percent of income as dividends, among others. This is detailed while suggesting Indian REIT model.
As mutual funds are well understood as a vehicle for investment by small investors, it is recommended that the same structure be extended to Real Estate Investment Schemes (REIS) in India. However, in addition they can also be structured in form of Venture funds or private equity funds provided necessary amendments and regulations are put in place. REIS should be governed by the existing guidelines and necessary modifications should be made to the Securities Exchange Board of India (Mutual Fund) Regulations.
Number of Pages of Project Report: 140
Package Includes: Synopsis/Project Proposal + Project Report
Project Format: Document (.doc)
Table of Contents of Project Report:
Executive Summary
Methodology
I. Introduction
II. Objectives
III. Information Collection
IV. Proposed Chapter Scheme
REIT- Real Estate Investment Trust
I. What is a REIT?
II. History of REIT
III. What classifies a REIT?
IV. Types of REIT
V. Forming and Operating a REIT
VI. Making the Economic Case for the REIT
a. Micro Factors
b. Macro Factors
VII. What Type of Property is Most Suitable for a REIT?
Structuring the REIT Vehicle
I. Issues
a. Management Of the REIT
b. Management Of the Properties
c. Composition of Board of Trustees
d. Governance
e. Sponsors Involvement
f. Accounting and Reporting Issues
g. Legal and Administrative considerations
h. Regulatory Body Approvals
II. REITs Structures
a. Traditional
b. UPREIT
c. Down REIT
d. Mutual Funds in Canada
e. Business and Non Business REIT
f. REIT Vs Corporate Structure
REIT Evaluation
I. Matters to consider before proceeding with a REIT Transaction
II. Key elements in evaluating a REIT
REIT Stock
I. Nature
II. Investing in REIT
III. REIT and Bonds
Global REIT
I. Development
II. Outlook
Global REIT Comparisons
I. North America, Europe & Asia Pacific
II. Canadian vs. U.S. REITs
III. Special Focus: Asian REIT Regimes
IV. 10 Global Real Estate Trends to Watch
V. Lessons from US
REIT’s in India
I. Indian Real Estate Market
II. Indian Real Estate – Why has it caught everyone’s eye?
III. Challenges faced by Indian Real Estate
IV. Prospects and Opportunities of Real Estate investing in India
V. Rationale for REIT
VI. Is India ready for REIT?
VII. Mechanics of an Indian REIT regime
a. Changes in Legislation and Reform
b. Structure
c. Legal Aspects
d. Procedure for Launching Schemes
e. Scheme Characteristics
f. Investment Objectives and Restrictions
g. Risk Management
Conclusion
Bibliography
Annexure
I. Questionnaire
II. Business Cards
