What is a REIT
Real Estate Investment Trusts are essentially companies that invests in property which it rents out.
They make money with both the rental income and the increase of the price of property, if and when they sell the properties. They dont pay tax on either of these income aspects, and have to pay the profits out every year to the shareholders/investors.
You can invest in these from as little as under £1, select and understand their performance and investments with us, all in one place.
Great! But why are you telling me about it?
Ok, so you have understood the basics about the general types of investment (if not, spend a few minutes here). If you're ready now to start to look at property investment, but don't have the deposit or mortgage, then a REIT is a good option to consider.
If you're considering equity investment and new to it - consider a REIT, historically they have outperformed equities. They own properties, which is much simpler to understand then the business of some other equities.
Lastly, we have some great tools and unique insights to help you know everything you need.
OK - so I know why, but how?
Well, take a look below, to understand some aspects that the REITs can be compared on. These are all reported and audited, so there is no room for exaggeration.
Then head over here and start your search, play around with the search fields and see whats out there. See the properties on a map and the individual details - its all on show!
Dive deeper and compare a few, to see how they really stack up, and which is the best choice for you.
Finally, when you feel ready, take the plunge and buy....
Whats important to know?
Metrics and what they mean:
The sector of the REIT refers to what kind of buildings it is focused on. For example they might be industrial like a warehouse for distribution of online sales, or it might be residential and invest in student housing.
Price per share
This is the price you have to pay to buy one share. It goes up and down thanks to supply and demand and an efficient market. The share is worth the gap between what people are willing to buy it for (say £1.00) and what people are willing to sell it for (say £1.02). In this example the share price would have a buy and a sell price (called bid and offer) of £1.00 and £1.02.
This is a time measure and means 3 months. For example a quarter is the 1st January until the 31st of March. These are always in relation to the companies financial year. If the company has a year end on the 28th February, then the first quarter will be from 1st of March until 31st of May and so on.
This is how the company gives the money it makes to the shareholders. As one of the rules of being a REIT is that it gives at least 90% of its profits to its shareholders each year, it is forced to pay dividends. If the company has 100 shares and makes a profit of £300, then each shareholder will receive a cheque for £3, for every share they own. Alternatively the company could give more shares for the value of the dividend, but this is less common.
We will call this debt, but it's often called LTV or Loan to Value. This is how much debt (bank loans or bonds etc) that the company has in relation to what it owns. This is important to know because a company which owns all its buildings without having to borrow any money is under less pressure if it loses a tenant as it does not have regular interest payments to pay on the debt. Of course the company still has running costs, so still needs to generate enough income to cover those.
Return or Yield
This is a formula in relation to the dividend. It is the percentage (%) value of annual dividend in relation to the share price. For example if a share is £1 and the annual dividend is 5p, then the yield is 5%.
This is a measure of how much of the property is currently rented out. As this can be distorted if the all of the buildings or parts of the building are different sizes, like if there are 10 small shops all rented out and one superstore empty, we use a more appropriate measure which we have based on the value.
The way this is calculated is that we take the total rental value of the empty spaces and divide it by the total rental value of the whole portfolio (all the properties the company owns, including the empty ones).
This is the money the company makes, so in this case it's primarily the rent paid by the tenants.
Another formula, its the price per share, multiplied by the total amount of shares. It shows you the company value in the eyes of the shareholder. It might be more or less then the assets the company holds, although where it is less, this tends to mean that either the company is undervalued (worth less that it should be, so it should increase in value) or that the asset valuations are too high, such as a highly valued shopping centre which no one wants to visit any more.
Net operation income
This is the profit made from the main aspect of the business, which is renting out properties. This is calculated by taking the revenue and deducting the associated costs. It does not include any other deductions like profits or losses on sales of properties or any costs associated with selling any profits. It gives an indication of how the company is doing without the distortion of one off items like sales.
The total amount of properties bought in the year, minus the total amount sold in the year. Basically the change in the number of properties that the company owns.
Net Asset Value
The total value of the assets of the company - in a REIT that will mainly the value of the properties. These are valued regularly by experts, but just like everything, an expert might not be 100% accurate with their valuation.
The total amount of shares in the company. The company can occasionally issue new shares, which it might want to do to raise money to buy a new property or development.
Earnings per Share (EPS)
The total profit of the company, divided by the total number of shares. This should be slightly higher or the same amount as the dividend, because one of the rules of being a REIT is that they give out at least 90% of the profit to the shareholders each year.