What is REITs?
REIT stands for real estate investment trust and is also called “real estate stock”. A REIT is a company that purchase, develop, manage and sell real estate assets using funds pooled from shareholders. REITs offer the benefit of owning real estate without the headaches or expense of being a landlord.

Benefits/advantages of REITs
Usually, REITs’ company must distribute at least 90% of its taxable income as dividends to its shareholders each year. This is to ensure the company qualify as a REIT as required by regulations, or due to tax incentives. This makes REITs high-yield stocks and extremely attractive as income-generating assets.

Another major advantages of REITs are the liquidity and diversity. Unlike the traditional real estate ownership, the shares in REIT can be easily sold anytime through stock markets, and we can invest a small amount to own part of the properties, lands, etc.

Transaction cost to buy and sell REITs is also low compared to normal properties, and its provide less financial risk because we are investing in a portfolio of properties (various properties), instead of a single building.

REITs in Malaysia
M-REIT is the term for REITs in Malaysia, which maintains its status under the Securities Commission (Suruhanjaya Sekuriti) principle.

Under the SC’s guideline, there are tax incentives offered for REITs.

• Stamp duty exemption for sale of real estates to a REIT
• Tax exemption at REIT level (tax transperancy) provided that 90% of its income is distributed; and
• Lower income tax on income received from a REIT (i.e. 10% for individuals and institutions[1]).

*Guidelines on Real Estate Investment Trusts can be downloaded HERE
*Guidelines for Islamic Real Estate Investment Trusts can be downloaded HERE

List of M-REITs

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