Real Estate Investment TReal Estate Investment Trustrust

房地產投資信託基金房地產投資信託基金

Wong Yee Han, Roni (043102)Tsang Pui Yee, Polly (043112)Kwok Chi Keung, Rex (043126)Yeung Tat Chung, Angus (043097)

AgendaAgenda• Introduction of REIT• Example of REIT – The Link• Comparison of different REIT in HK• Evaluation and Recommendations• Conclusion

Roni Wong

Introduction of REIT

Roni Wong

What is Real Estate What is Real Estate Investment trust (REIT)?Investment trust (REIT)?

• collective investment scheme in a portfolio of income-generating real property

• Manager distributes all / almost of net income holders

• Annual or semi-annual basis

Roni Wong

• Investor buy / sell through a stock exchange

• REIT do not redeem investors interests• Long term income yield• not for capital appreciation on resale

What is Real Estate What is Real Estate Investment trust (REIT)? (con’t)Investment trust (REIT)? (con’t)

Roni Wong

AdvantagesAdvantages• Realize and redeploy capital investment asset become more liquidate• Regular income • Invest in an asset class which is difficult to access • Remove double taxation

Roni Wong

Example of REIT –

The Link 領匯房地產投資信託基金領匯房地產投資信託基金

Polly Tsang

BackgroundBackground• Stock code: 823 • invests in 180 retail and carpark facilities • one million sq.m of retail space and aro

und 80,000 carpark spaces • 40% of people lived near the Link REIT p

roperties

Polly Tsang

Polly Tsang

Investment strategies Investment strategies • invest in properties for the long-term • focus on sustainable-income

producing properties with the potential for long-term income and capital growth

• maintain a large and geographically diversified portfolio

Polly Tsang

Investment strategies (con’t)Investment strategies (con’t)• convenience-based retail properties primarily

serving the basic consumer needs of the residents of the adjacent housing estates and other visitors

• carparks serving the tenants and customers of the retail properties and the residents of the surrounding

• neighborhoods and other visitors

Polly Tsang

Dividend DistributionDividend Distribution• no less than 90% of total distributable in

come • not less than HK$0.6176 • 21 December 2006 - 32.81 HK cents • 30 August 2006 - 21.81 HK cents

Polly Tsang

Advantages Advantages • Certainty as to business focus• A policy to distribute of an amount

equivalent to 100% of total distributable income

• Financial and operating transparency

Polly Tsang

Comparison of different Comparison of different REITs in Hong KongREITs in Hong Kong

Link REIT(Link REIT( 領匯房產基金領匯房產基金 ,823) ,823) Gzi REIT(Gzi REIT( 越秀房產信託基金越秀房產信託基金 ,405),405)Champion REIT(Champion REIT( 冠君產業信託冠君產業信託 ,2778),2778)Prosperity REIT(Prosperity REIT( 泓富產業信託泓富產業信託 ,808),808)

Rex Kwok

Link REIT--- invests in 180 retail and carparks facilities

Rex Kwok

• With an Internal Floor Area ("IFA") of approximately one million sq.m of retail space and around 80,000 carparks spaces

• the properties are on the doorstep to 40% of Hong Kong's seven-million populations.

Rex Kwok

Gzi REIT---consists of commercial properties located in Guangzhou

1.White Horse Units2.Fortune Plaza Units3.City Development Plaza Units4.Victory Plaza Units

Rex Kwok

The overall occupancy of the 4 properties improved to over 90%

• White Horse Building is

maintained at 100% • Fortune Plaza at

approximately 90.2% • City Development Plaza

at approximately 92.6% • Victory Plaza at 100%

Rex Kwok

Champion REIT---formed primarily to office and retail properties in Hong Kong

• Comprises 91.5% of the Gross Rentable Area of Citibank Plaza and substantially all of the parking spaces at Citibank Plaza.

Rex Kwok

• Citibank Plaza comprises Citibank Tower a 47-storey building and ICBC Tower a 37-storey building and includes a retail podium and a carpark

• It is hub of banking and financial activities in the Central District

Rex Kwok

Prosperity REIT---own a high quality portfolio of seven

Hong Kong commercial properties

Rex Kwok

• Comprising three Grade A office buildings in decentralized business districts

• A portion of three industrial/office buildings

• A portion of one industrial building

Rex Kwok

DiscussionDiscussion

According to their different portfolio of properties, which REITs will you subscribe and why?

Rex Kwok

Evaluation andRecommendations

Angus Yeung

EvaluationEvaluation• Market scale is large

• Low quality of capital • Underdeveloped supervision

structure • Lack of experience of fund managers• Unclear investment strategies

Angus Yeung

RecommendationsRecommendations1) Redevelop the assets (Shopping mall, Carparks, Estates) Capital quality and rent level of private

properties

2) Human resources management Training and learning from other count

ries (eg, USA, Singapore)Angus Yeung

Recommendations (con’t)Recommendations (con’t)3) Investment strategies For business Focus on SME or large companies Benefit to properties Adjust the interest rate

Angus Yeung

ConclusionConclusion• REIT will become more popular

• The market scale will increase to 60%

• Active in financial market

Q & A

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