Q:
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What is “REITs”?
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A:
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To put it simply, it means that many investors put the money together and give to a fund manager, who will invest in real estate (such as shopping malls, residential buildings, hotels), or infrastructure projects (such as airports, railways, highways, etc.) Then, after deducting the cost of heads (management fee) of the fund manager, the money will be distributed to investors.
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Q:
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What is the difference between this method and buying a house or infrastructure directly?
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A:
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Buying a house or infrastructure directly need large amount of funds, long cycle time and efforts, it needs to be established an entity to operate independently. However REITs is public funds that can be circulated in the secondary market, similar to stocks, that is, we can take it is as hand over our money to a fund manager and the construction process will take care by the developer. In fact, investors will put their money in the secondary market and earns profits.
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Q:
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What are the concerns in this pilot?
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A:
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Firstly, it is not involving real estate projects but have the basic infrastructure projects. Secondly, it is not same process during the construction due to the restrictions of the relevant provisions of the Securities Investment Fund Law of China. And there are no tax benefit regulations are mentioned. So, the following policies will be more expected.
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What are the differences of introduction of REITs in this pilot?
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A:
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REITs can also be called infrastructure REITs this time, and it only focus on key regions and industries. Key regions include Beijing, Tianjin and Hebei, the Yangtze River Economic Belt, the Xiong'an New District, the Guangdong-Hong Kong-Macao Greater Bay Area, Hainan and the Yangtze River Delta. Key industries refer to such as transportation, environmental protection, public utilities plus new infrastructure.
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Q:
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What are the benefits of infrastructure REITs?
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A:
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International infrastructure REITs require that the ratio of income distribution be not less than 90% of the distributed profit which are also not allowed to be retained. This is not same as stock dividends, but there have certain risks.
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