Real Estate Investment Trusts  
17/03/2011 
 

A Real Estate Investment Trust (REIT) is a collective investment scheme that aims to deliver a source of recurrent income to investors through focused investment in a portfolio of income-generating properties such as shopping malls, offices, hotels and service apartments in Hong Kong and/or overseas.

REITs provide regular income distribution to investors.  All or the majority of a REIT’s net income after tax is paid to investors in the form of dividends at regular intervals.  According to existing SFC regulations, the dividend payout ratio of a REIT has to be at least 90 per cent. Investors should note that the amount available for distribution will also be adjusted for losses/gains from real estate revaluation or disposal.

REITs are mainly regulated by the Securities and Futures Commission (SFC) and must be authorised by the SFC before they can be listed on the Stock Exchange.  An SFC-authorised REIT is governed by the SFC’s Code on Real Estate Investment Trusts and the relevant listing rules issued by the Stock Exchange of Hong Kong.

Since a REIT that is authorised for sale in Hong Kong must be listed on the Stock Exchange of Hong Kong, investors can buy and sell units of REITs similar to stocks at the Stock Exchange.  However investors should be aware that REITs may trade at a premium or discount to their respective net asset values (NAV).

Investors should refer to individual REITs' listing documents and announcements for details. The documents can be found at the "Listed Company Information" section of the HKExnews website. Investors may also consult their brokers or investment advisers for details.