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Real Estate Investment Trust
A Real Estate Investment Trust (REIT) is a financial product that invests capital raised from investors in real estate such as offices and commercial facilities and pays out rent income generated from such properties and capital gains from changes in portfolio as distributions to investors.
Major investment targets for investment trusts were limited to securities such as stocks and bonds until the revision of the Investment Trust Law, which made it possible to make investments principally in real estate after November 2000. Created in the U.S. in 1960, they are called Real Estate Investment Trusts or REITs for short. Following the example in the U.S., they are called J-REITs in Japan.
There are two types of REITs, Corporate Type and Trust Type. The Company provides asset management in a Corporate Type REIT.
A Corporate Type REIT establishes a corporation called an investment corporation and raises capital from investors, which is invested in real estate in the name of the investment corporation.
This investment corporation hires external professionals for asset management, asset custody, supervision of the management status and any other general trustee administration.
Among these operations, asset management may be assigned only to licensed asset management companies for investment corporations (REIT management companies) such as our company.
An investment corporation issues investment units equivalent to the shares of a stock company.
In addition, the investment corporation can virtually be exempt from the burden of corporate income tax by deducting distributions from gross income if it satisfies certain qualifications such as distributing more than 90% of the distributable profits to investors.
In other words, distributions higher than general shares can be generally expected due to preferential tax treatment.
