Two things you need to know about investing in REITs
Do other countries have REITs and how can I invest in them? What are "stapled securities" A-REITs? We answer your questions on real estate investment trusts.
Do other countries have REITs and how can I invest in them?
Other countries in the Americas, Europe, Asia and other jurisdictions have REIT structures but accessing foreign markets can be costly and complex.
Another way is to gain access to these markets via an mFund, which are managed funds that can be accessed in a similar way to how you would access an A-REIT on ASX.
This way, you will keep all your REIT investments on ASX alongside any other ASX investments, such as shares, that you may have.
What are "stapled securities" A-REITs?
Some REITs have a unique "stapled security" structure that consists of two or more securities (usually a company and a trust) that are contractually bound to form a single unit.
The entities cannot be bought or sold separately.
Some A-REITs may adopt these structures to provide security holders with a non-REIT exposure, such as a funds management platform or property development business.
Isolating the trust structure allows for income derived from the commercial property assets to be passed through to investors to be taxed in their hands.
Conversely, the company pays tax on any profit generated by the management of assets at the company tax rate with dividends and any franking credits passed onto security holders.
Such structures can provide higher growth opportunities but also be a higher risk investment than a traditional REIT.
Investing in stapled securities can have tax implications for investors. You should seek your own taxation advice.
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