nasaa 2010 investment adviser training real estate investment trust lindsay derosia state of...
TRANSCRIPT
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
Real Estate Investment TrustReal Estate Investment Trust
Lindsay DeRosiaLindsay DeRosia
State of MichiganState of Michigan
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
These views are my own views These views are my own views and not necessarily those of and not necessarily those of
NASAA or the State of NASAA or the State of MichiganMichigan
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
REITREIT
““Real Estate Investment Trust”Real Estate Investment Trust”
Entities that invest in different kinds Entities that invest in different kinds of real estate or real estate related of real estate or real estate related assetsassets
Created by Congress in 1960 to give Created by Congress in 1960 to give smaller investors the ability to invest smaller investors the ability to invest in real estatein real estate
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
REITREIT A company that qualifies as a REIT is able to A company that qualifies as a REIT is able to
deduct dividends paid to shareholders from deduct dividends paid to shareholders from its corporate taxable incomeits corporate taxable income
IRS sets qualification requirements for IRS sets qualification requirements for REITs, including:REITs, including:• Required to annually distribute 90% of its Required to annually distribute 90% of its
taxable income to shareholders in the form taxable income to shareholders in the form of of dividendsdividends
• Must invest at least 75% of its total assets in Must invest at least 75% of its total assets in real estate and generate 75% or more of its real estate and generate 75% or more of its gross income from investments in or gross income from investments in or mortgages on real propertymortgages on real property
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
REITsREITs Three Types:Three Types:
• Equity REITsEquity REITs Own and operate income producing propertyOwn and operate income producing property
• Mortgage REITsMortgage REITs Lend money directly to real estate owners and Lend money directly to real estate owners and
operators, or indirectly through the acquisition operators, or indirectly through the acquisition of loans or mortgage baked securitiesof loans or mortgage baked securities
• Hybrid REITsHybrid REITs Both own properties and make loans to Both own properties and make loans to
owners and operatorsowners and operators
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
REITsREITs Registration RequirementsRegistration Requirements
• Publicly Traded REITsPublicly Traded REITs File with the SEC and trade on a national exchangeFile with the SEC and trade on a national exchange
• Public, Non-Listed REITPublic, Non-Listed REIT File with SEC (and state regulators), but whose File with SEC (and state regulators), but whose
shares do not trade on a national exchangeshares do not trade on a national exchange
• Private REITsPrivate REITs Not registered with SEC or state and does not Not registered with SEC or state and does not
trade on an exchangetrade on an exchange Must comply with appropriate registration Must comply with appropriate registration
exemptionexemption
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
REITs - LiquidityREITs - Liquidity• Publicly Traded REITPublicly Traded REIT
Liquidity and pricing provided by the market Liquidity and pricing provided by the market throughout the trading daythroughout the trading day
• Public, Non Listed REITPublic, Non Listed REIT Limited LiquidityLimited Liquidity
• Sold through brokers ($ commission)Sold through brokers ($ commission)• Typically investor “gets out” when it goes listed or Typically investor “gets out” when it goes listed or
liquidates assetsliquidates assets• Alternative is issuer’s redemption mechanism Alternative is issuer’s redemption mechanism
(limited)(limited)
• Private REITPrivate REIT Limited LiquidityLimited Liquidity
• Existence of and terms of any redemption programs Existence of and terms of any redemption programs vary by company and are generally limited in naturevary by company and are generally limited in nature
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
REITs – For more informationREITs – For more information
http://www.sec.gov/answers/reits.hthttp://www.sec.gov/answers/reits.htmm
National Association of Real Estate National Association of Real Estate Investment Trusts Investment Trusts www.nareit.orgwww.nareit.org
NASAA (Statements of Policy)NASAA (Statements of Policy)
FINRA Notice to MembersFINRA Notice to Members
NASAA 2010 Investment Adviser TrainingNASAA 2010 Investment Adviser Training
Thank you!Thank you!
Have a nice day Have a nice day