Real 1820 Midterm 2 week 9

Question 1

What is a REIT

Answer 1

• A real estate investment trust (REIT) is a company that owns and operates income-producing real estate

Question 2

what was the first reit traded

Answer 2

In 1993: First REIT traded on the Toronto stock exchange Riocan

Question 3

National REIT Footprint

Answer 3

majority is retail
followed by industrial and then mixed use

Question 4

Why do people like to invest in REIT

Answer 4

stable and consistent occupancy
- income returns grow over time from repositioning and new leasing of propeerties
- annual dividend

Question 5

How do you invest in REIT

Answer 5

say $5000 to invest divided by cost per unit (11.86) = 421 units

Question 6

Risk Of REIT Investment

Answer 6

1. the price of trust units depends on market conditions and supply and demand
2. distributions are not guaranteed. REITS may reduce or suspend distributions
3. A rise in interest rates may reduce the value of a REIT (other profitable investments become available ie GIC’s)
4. Cyclical - Growth and Downturns
5. Do not focus on distributions only - consider the quality of its assets and management