First Real Estate Investment Trust

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What Qualifies As A Reit

Stanlib Kenya unveils Kenya’s first Real Estate Investment Trust

Most REITs have a straightforward business model: The REIT leases space and collects rents on the properties, then distributes that income as dividends to shareholders. Mortgage REITs don’t own real estate, but finance real estate, instead. These REITs earn income from the interest on their investments.

To qualify as a REIT, a company must comply with certain provisions in the Internal Revenue Code . These requirements include to primarily own income-generating real estate for the long term and distribute income to shareholders. Specifically, a company must meet the following requirements to qualify as a REIT:

  • Invest at least 75% of total assets in real estate, cash, or U.S. Treasuries
  • Derive at least 75% of gross income from rents, interest on mortgages that finance real property, or real estate sales
  • Pay a minimum of 90% of taxable income in the form of shareholder dividends each year
  • Be an entity that’s taxable as a corporation
  • Be managed by a board of directors or trustees
  • Have at least 100 shareholders after its first year of existence
  • Have no more than 50% of its shares held by five or fewer individuals

Today, it’s estimated that REITs collectively hold about $3.5 trillion in gross assets publicly traded equity REITs account for $2.5 trillion.

The Keys To Assessing Any Reit

There are a few things to keep in mind when assessing any REIT. They include the following:

  • REITs are true total-return investments. They provide high dividend yields along with moderate long-term capital appreciation. Look for companies that have done a good job historically at providing both.
  • Unlike traditional real estate, many REITs are traded on stock exchanges. You get the diversification real estate provides without being locked in long-term. Liquidity matters.
  • Depreciation tends to overstate an investment’s decline in property value. Thus, instead of using the payout ratio to assess a REIT, look at its funds from operations instead. This is defined as net income less the sale of any property in a given year and depreciation. Simply take the dividend per share and divide it by the FFO per share. The higher the yield the better.
  • Strong management makes a difference. Look for companies that have been around for a while or at least possess a management team with loads of experience.
  • Quality counts. Only invest in REITs with great properties and tenants.
  • Consider buying a mutual fund or ETF that invests in REITs, and leave the research and buying to the pros.
  • According to the Securities and Exchange Commission, a REIT must invest at least 75% of its assets in real estate and cash, and obtain at least 75% of gross income from sources such as rent and mortgage interest.

    Debt To Equity History And Analysis

    Debt Level: FCR.UN’s net debt to equity ratio is considered high.

    Reducing Debt: FCR.UN’s debt to equity ratio has increased from 92.3% to 94.4% over the past 5 years.

    Debt Coverage: FCR.UN’s debt is not well covered by operating cash flow .

    Interest Coverage: FCR.UN’s interest payments on its debt are not well covered by EBIT .

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    Analyst Future Growth Forecasts

    Earnings vs Savings Rate: Insufficient data to determine if FCR.UN’s forecast earnings growth is above the savings rate .

    Earnings vs Market: Insufficient data to determine if FCR.UN’s earnings are forecast to grow faster than the Canadian market

    High Growth Earnings: Insufficient data to determine if FCR.UN’s earnings are expected to grow significantly over the next 3 years.

    Revenue vs Market: FCR.UN’s revenue is forecast to grow slower than the Canadian market .

    High Growth Revenue: FCR.UN’s revenue is forecast to grow slower than 20% per year.

    First Capital Reit Announces Strategy Around Normal Course Issuer Bid

    First Real Estate Investment Trust announces restructure of master ...

    First Capital REIT announced earlier today the approval by the TSX of a normal course issuer bid pursuant to which it may repurchase its trust units for cancellation beginning on May 18, 2022. The repurchase of trust units will be primarily funded by the disposition of non-core properties that are expected to be sold at or above IFRS value.

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    First Capital Reit Announces First Quarter 2022 Results Characterized By Record Leasing Volume Driving In

    First Capital Real Estate Investment Trust , announced today financial results for the first quarter ended March 31, 2022. The 2022 First Quarter Report is available in the Investors section of the Trust’s website at www.fcr.ca and has been filed on SEDAR at www.sedar.com.

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  • Pros And Cons Of Investing In Reits

    First ever real estate investment trust in East Africa listed at Nairobi Securities Exchange

    REITs can play an important part in an investment portfolio because they can offer a strong, stable annual dividend and the potential for long-term capital appreciation. REIT total return performance for the last 20 years has outperformed the S& P 500 Index, other indices, and the rate of inflation. As with all investments, REITs have their advantages and disadvantages.

    On the plus side, REITs are easy to buy and sell, as most trade on public exchangesa feature that mitigates some of the traditional drawbacks of real estate. Performance-wise, REITs offer attractive risk-adjusted returns and stable cash flow. Also, a real estate presence can be good for a portfolio because it provides diversification and dividend-based incomeand the dividends are often higher than you can achieve with other investments.

    On the downside, REITs don’t offer much in terms of capital appreciation. As part of their structure, they must pay 90% of income back to investors. So, only 10% of taxable income can be reinvested back into the REIT to buy new holdings. Other negatives are that REIT dividends are taxed as regular income, and some REITs have high management and transaction fees.

    • Potential for high management and transaction fees

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    First Capital Reit Schedules Third Quarter 2021 Results Release

    First Capital REIT will release its financial results for the third quarter ended September 30, 2021, on Tuesday, November 2, 2021, after market hours. Management’s Discussion & Analysis and the Consolidated Financial Statements for the third quarter will be available on First Capital’s website at www.fcr.ca in the ‘Investors’ section, and on the Canadian Securities Administrators’ website at www.sedar.com.

    What Are The Different Types Of Reits

    • Equity REITs The majority of REITs are publicly traded equity REITs. Equity REITs own or operate income-producing real estate. The market and Nareit often refer to equity REITs simply as REITs.
    • mREITs mREITs provide financing for income-producing real estate by purchasing or originating mortgages and mortgage-backed securities and earning income from the interest on these investments.
    • Public Non-listed REITs Public, non-listed REITs are registered with the SEC but do not trade on national stock exchanges.
    • Private REITs Private REITs are offerings that are exempt from SEC registration and whose shares do not trade on national stock exchanges.

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    Historical Returns Of Reits

    Real estate investment trusts are historically one of the best-performing asset classes available. The FTSE NAREIT Equity REIT Index is what most investors use to gauge the performance of the U.S. real estate market. Between 2010 and 2020, the index’s average annual return was 9.5%.

    More recently, the three-year average for REITs between November 2017 and November 2020, 11. 25%, was well above both the S& P 500 and the Russell 2000, which clocked in at 9.07% and 6.45%, respectively. Historically, investors looking for yield have done better investing in real estate than fixed income, the traditional asset class for this purpose. A carefully constructed portfolio should consider both.

    Registered Education Savings Plan Trusts

    First Real Estate Investment Trust (SGX:AW9U)

    If an RESP trust held non-qualified investments during the tax year, you have to complete and file a T3 return to calculate the taxable income from-non-qualified investments, determined under subsection 146.1 of the Act. If the trust is reporting capital gains or losses, it has to report the full amount on line 1 of the T3 return.

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    First Capital Reit Announces December 2021 Distribution

    First Capital REIT announced today that it will make a cash distribution of $0.036 per REIT unit for the month of December, representing approximately $0.43 per REIT unit on an annualized basis. The distribution will be paid on January 17, 2022 to unitholders of record as at December 31, 2021.

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  • How To Invest In Reits

    You can invest in publicly traded REITsas well as REIT mutual funds and REIT exchange-traded funds by purchasing shares through a broker. You can buy shares of a non-traded REIT through a broker or financial advisor who participates in the non-traded REITs offering.

    REITs are also included in a growing number of defined-benefit and defined-contribution investment plans. An estimated 145 million U.S. investors own REITs either directly or through their retirement savings and other investment funds, according to Nareit, a Washington, D.C.-based REIT research firm.

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    Pooled Registered Pension Plans

    Pooled Registered Pension Plans must operate through an arrangement acceptable to the Minister. All property held in connection with a PRPP is required to be held in trust by the administrator on behalf of the plan members. As a result, a PRPP is generally treated as a trust for tax purposes, the administrator is the trustee of that trust, the members are the beneficiaries, and the trust property is the property held in connection with the plan. A pooled registered pension plan trust will be excluded for purposes of the 21 year deemed disposition rule and other specified measures. When certain criteria are met, a pooled registered pension plan trust will be exempt from Part 1 tax.

    For more information, go to Pooled registered pension plans.

    Investing In Reits: Get Started

    Mojo Capitals – Costa del Sol´s First Real Estate Investment Trust (REIT)

    Getting started is as simple as opening a brokerage account, which usually takes just a few minutes. Then youll be able to buy and sell REITs just as you would any other stock. Because REITs pay such large dividends, it can be smart to keep them inside a tax-advantaged account like an IRA, so you defer on the distributions.

    If you dont want to trade individual REIT stocks, it can make a lot of sense to simply buy an ETF or mutual fund that vets and invests in a range of REITs for you. You get immediate diversification and lower risk. Many brokerages offer these funds, and investing in them requires less legwork than researching individual REITs for investment.

    Former NerdWallet writer Jim Royal contributed to this article.

    Disclosure: The author held no positions in the aforementioned securities at the original time of publication.

    About the author:Kevin Voigt is a former investing writer for NerdWallet. He has covered financial issues for more than 20 years, including for The Wall Street Journal and CNN.com.Read more

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    Registered Retirement Savings Plan Or Registered Retirement Income Fund Trusts

    An RRSP, or RRIF trust has to complete and file a T3 return if the trust meets one of the following conditions:

    • the trust has borrowed money and paragraph 146 or 146.3 of the Act applies
    • the RRIF trust received a gift of property and paragraph 146.3 applies
    • the last annuitant has died and paragraph 146 or subsection 146.3 applies. If this is the case, claim an amount on line 47 of the T3 return only if the allocated amounts were paid in accordance with paragraph 104

    If the trust does not meet one of the above conditions and the trust held non-qualified investments during the tax year, you have to complete a T3 return to calculate the taxable income from non-qualified investments, determined under subsection 146 or 146.3. If the trust is reporting capital gains or losses, it has to report the full amount on line 1 of the T3 return.

    If the trust does not meet one of the above conditions and the trust carried on a business, you have to complete a T3 return to calculate the taxable income of the trust from carrying on a business. Do not include the business income earned from qualified investments for the trust.

    First Capital Reit Announces June 2022 Distribution

    First Capital REIT announced today that it will make a cash distribution of $0.036 per REIT unit for the month of June, representing approximately $0.43 per REIT unit on an annualized basis. The distribution will be paid on July 15, 2022 to unitholders of record as at June 30, 2022.

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    Nuclear Fuel Waste Act Trust

    A trust under paragraph 149 of the Act. This is a trust that was created because of a requirement imposed by subsection 9 of the Nuclear Fuel Waste Act. The trust must meet all of the following conditions:

    • the trust is resident in Canada
    • the only persons that are beneficially interested are one of the following:
    • Her Majesty in right of Canada
    • Her Majesty in right of a province
    • a nuclear energy corporation all the shares of the capital stock of which are owned by one or more persons described in clause or
    • the waste management organization established under section 6 of that Act if all shares of its capital stock are owned by one or more nuclear energy corporations described in clause
    • Atomic Energy of Canada Limited, being the company incorporated or acquired in accordance with subsection 10 of the Atomic Energy Control Act

    Real Estate Investment Trust

    Artis Real Estate Investment Trust Releases First Quarter Results and ...

    A real estate investment trust is a company that owns, and in most cases operates, income-producing real estate. REITs own many types of commercial real estate, including office and apartment buildings, warehouses, hospitals, shopping centers, hotels and commercial forests. Some REITs engage in financing real estate.

    Most countries’ laws on REITs entitle a real estate company to pay less in corporation tax and capital gains tax. REITs have been criticised as enabling speculation on housing, and reducing housing affordability, without increasing finance for building.

    REITs can be publicly traded on major exchanges, publicly registered but non-listed, or private. The two main types of REITs are equity REITs and mortgage REITs . In November 2014, equity REITs were recognized as a distinct asset class in the Global Industry Classification Standard by S& P Dow Jones Indices and MSCI. The key statistics to examine the financial position and operation of a REIT include net asset value , funds from operations , and adjusted funds from operations .

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    First Capital Reit Announces April 2022 Distribution

    First Capital REIT announced today that it will make a cash distribution of $0.036 per REIT unit for the month of April, representing approximately $0.43 per REIT unit on an annualized basis. The distribution will be paid on May 16, 2022 to unitholders of record as at April 29, 2022.

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    First Capital REIT invites you to participate at 2:00 p.m. on Wednesday, May 4, 2022, in a live conference call with senior management to discuss financial results for the first quarter ended March 31, 2022.

  • How Do Reits Make Money

    Most REITs operate along a straightforward and easily understandable business model: By leasing space and collecting rent on its real estate, the company generates income which is then paid out to shareholders in the form of dividends. REITs must pay out at least 90 % of their taxable income to shareholdersand most pay out 100 %. In turn, shareholders pay the income taxes on those dividends.

    mREITs dont own real estate directly, instead they finance real estate and earn income from the interest on these investments.

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