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61-740: Dexus is an Australian real estate investment trust . Founded in 1984, it is listed on the Australian Securities Exchange . Dexus was listed by Deutsche Bank on the Australian Securities Exchange in 1984 as the Deutsche Diversified Trust, followed by the Deutsche Industrial Trust in 1984 and the Deutsche Office Trust in 1998. In 2004, all three were stapled to form the DB Rreef Trust. In 2008 it

122-679: A 100 percent payout ratio for all income at lower rates. This inhibits the internal growth of the REIT and causes investors to not tolerate low or non-existent yields as the interest rates are more sensitive. Economic climates characterized by rising interest rates can cause a net negative effect on REIT shares. The dividends paid by REITs look less attractive when compared to bonds that have increasing coupon rates. Also, when investors shy away from REITs, it makes it difficult for management to raise additional funds to acquire more property. The first REIT in Kenya

183-531: A collaboration with local authorities, Emirates REIT has been able to establish a platform enabling it to purchase properties anywhere in Dubai given a minimum of 51% of local ownership of its shares. This allows the company to diversify its portfolio with an efficient revenue generating mix of properties in the prime locations of Dubai. Emirates REIT is the first REIT established within the United Arab Emirates. It

244-559: 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 (NAV), funds from operations (FFO), and adjusted funds from operations (AFFO). REITs were created in the United States after President Dwight D. Eisenhower signed Public Law 86-779, sometimes called

305-479: A long time. Deleveraging is frustrating and painful for private sector entities in distress: selling assets at a discount can itself lead to heavy losses. In addition, dysfunctional security and credit markets make it difficult to raise capital from public market. Private capital market is often no easier: equity holders usually have already incurred heavy losses themselves, bank/firm share prices have fallen substantially and are expected to fall further, and

366-611: A parallel system of special purpose companies which can be used for the securitization of particular properties on the private placement basis. REIT shares targeted in 2016 accounted for 7 percent of the United States market, which were subsequently sold for less than half of the initial value at $ 31 billion. The Bursa Malaysia has 18 REIT listed with five Islamic REITS (shariah compliant – according to Islamic investment compliance). Dana Investasi Real Estat Berbentuk Kontrak Investasi Kolektif (DIREs) have lacked popularity because of high sale tax and double taxation. Until 2016, only one DIRE

427-419: A result, asset prices become too high in boom times and too low in bad times, rather than correctly reflecting the fundamental value of assets. This recurring leveraging-deleveraging cycle is one of the most important amplifying mechanism contributing to the credit cycles and business cycles . Deleveraging is responsible for the continuing fall in the prices of both physical capital and financial assets after

488-537: A sharp rise in unemployment and the pressure of deflation , therefore facilitating the process of private sector deleveraging and reducing the overall damage to the economy. Note that this comes at the expense of higher government debt, which will compromise the overall deleveraging of the economy. This view is in contrast with some other economists, who argue that a problem created by excessive debt cannot be ultimately solved by running up more debt, because unsustainably high government budget deficit could seriously harm

549-514: A significant period of deleveraging, which lasts six to seven years on average. Moreover, the process of deleveraging usually begins a few years after the start of the financial crisis. As in January 2012, four years after the start of the Great Recession , many mature economies and emerging economies in the world had just begun to go through a major period of deleveraging. This is mainly because

610-589: A total market capitalisation of approximately €15 billion which amounts to almost 2% of the total global REIT market capitalisation. Two out of the nine listed REITs are also included in the EPRA index , an index published by the European Public Real Estate Association (EPRA). The current top five REITs in Hong Kong are The Link REIT with a total market capitalisation of €8 billion, Hui Xian REIT with

671-438: A total market capitalisation of €2.3 billion, Champion REIT with a total market capitalisation of €1.8 billion, Fortune REIT with a total market capitalisation of €1 billion and Real Estate with a total market capitalisation of €700 million. As of August 2014, India approved creation of real estate investment trusts in the country. Indian REITs (country specific/generic version I-REITs) will help individual investors enjoy

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732-496: Is also the first REIT listed on NASDAQ Dubai and one of the five Shari'a compliant REIT in the world with a focus on Income-producing assets. Emirates REIT has a portfolio of over US$ 575.3 million consisting of a total of seven properties primarily focused on commercial and office space as of December 2014. It has had substantial growth over the last four years. The REIT concept was launched in Australia in 1971. General Property Trust

793-624: Is found that almost every major financial crisis during the period of study has been followed by a period of deleveraging. After the 2008 financial crisis, economists expected deleveraging to occur globally. Instead the total debt in all nations combined increased by $ 57 trillion from 2007 to 2015 and government debt increased by $ 25 trillion. According to the McKinsey Global Institute, from 2007 to 2015, five developing nations and zero advanced ones reduced their debt-to-GDP ratio and 14 countries increased it by 50 percent or more. As of 2015,

854-578: Is more important to restrict leverage in ebullient times to prevent the crash from happening in the first place. In addition, in the face of massive private sector deleveraging, monetary policy has limited effect, because the economy is likely to have been pushed up against the zero lower bound, where real interest rate is negative but nominal interest rate cannot fall below zero. Some economists, such as Paul Krugman , have argued that in this case, fiscal policy should step in and deficit-financed government spending can, at least in principle, help avoid

915-416: Is not the most common reason for deleveraging. Deleveraging usually happens after a market downturn and hence is driven by the need to cover loss, which can deplete capital, build a less risky profile, or is required by nervous lenders to prevent default. In the last case, lenders lower the leverage offered by asking for a higher level of collateral and down payment . It is estimated that from 2006 to 2008 ,

976-525: Is political resistance to these plans, especially from the Social Democratic Party . In June 2006 the ministry of finance announced that they planned to introduce REITs in 2007. The legal details seem to adopt much of the British REIT regulation. Deleveraging At the micro-economic level, deleveraging refers to the reduction of the leverage ratio , or the percentage of debt in

1037-651: Is proposing a regulatory framework similar to that of Singapore and Hong Kong. The Securities and Exchange Commission of Pakistan expected that about six REITs would be licensed within the first year, mainly large asset management companies. Pakistan has seen an outflow of investments by foreign real estate development companies, mostly based in Malaysia and Dubai. SECP has issued licenses to four parties namely, Arif Habib REIT Management Company, AKD REIT Management Company, Eden Developers REIT Management Company and SB Global REIT Management Company. The legal framework enabling

1098-529: Is the largest SIIC. Gecina is the second-largest publicly traded property company in France, with the third-highest asset value among European REITs. Germany planned to introduce REITs in order to create a new type of real estate investment vehicle . The Government feared that failing to introduce REITs in Germany would result in a significant loss of investment capital to other countries. Nonetheless, there still

1159-417: Is usually measured as a decline of the total debt to GDP ratio in the national accounts . The deleveraging of an economy following a financial crisis has significant macro-economic consequences and is often associated with severe recessions . While leverage allows a borrower to acquire assets and multiply gains in good times, it also leads to multiple losses in bad times. During a market downturn when

1220-431: The 2007–2008 financial crisis , after which listed REITs responded by deleveraging (paying off debt) and re-equitizing (selling stock to get cash) their balance sheets. Listed REITs and REOCs raised $ 37.5 billion in 91 secondary equity offerings, nine IPOs and 37 unsecured debt offerings as investors continued to act favorably to companies strengthening their balance sheets following the credit crisis. REIT dividends have

1281-943: The Shenzhen Stock Exchange on March 14. According to statistics from the Shanghai Stock Exchange, listing these two consumer infrastructure REITs has increased the total number of listed REITs to 23, with an issuance scale approaching 80 billion yuan. The Shenzhen Stock Exchange has reported that the funds raised by infrastructure REITs successfully listed on their exchange have surpassed 32 billion yuan. These projects encompass various asset types, including industrial parks, toll roads, storage logistics, ecological protection, clean energy, affordable rental housing, and consumer infrastructure. The products have been operating smoothly, with active investor participation, gradually enhancing market functions, thereby creating significant scale and demonstration effects. Japan permitted

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1342-400: The balance sheet of a single economic entity, such as a household or a firm. It is the opposite of leveraging , which is the practice of borrowing money to acquire assets and multiply gains and losses. At the macro-economic level, deleveraging of an economy refers to the simultaneous reduction of debt levels in multiple sectors, including private sectors and the government sector . It

1403-455: The "Law on Real Estate Funds" (Kiinteistörahastolaki, 1173–1997) it enables the existence of tax-efficient residential REITs. Qualifications As of 2018 Orava Residential REIT is the only REIT in Finland. The French acronyms for REIT are SIIC (publicly listed), contrary to SCPI and OCPI (which are two other kinds of real-estate trusts not publicly listed). In France , Unibail-Rodamco

1464-566: The ASX, with market capitalization in excess of A$ 100bn. Australia is also receiving growing recognition as having the world's largest REITs market outside the United States. More than 12 percent of global listed property trusts can be found on the ASX. REITs have been in existence in Hong Kong since 2005, when The Link REIT was launched by the Hong Kong Housing Authority on behalf of

1525-503: The Cigar Excise Tax Extension of 1960. The law was enacted to allow all investors to invest in large-scale, diversified portfolios of income-producing real estate in the same way they typically invest in other asset classes – through the purchase and sale of liquid securities . The first REIT was American Realty Trust founded by Thomas J. Broyhill, cousin of Virginia U.S. Congressman Joel Broyhill in 1961 who pushed for

1586-666: The DIFC. The first REIT license to be issued will be backed by Dubai Islamic Bank with a REIT named 'Emirates REIT' headed up by the dot com entrepreneur, Sylvain Vieujot. The issue is that DIFC domiciled REITs cannot acquire non-Freezone assets within the Emirate of Dubai. The only federally approved Freezone within the UAE is the DIFC itself so therefore any properties outside this zone are purchasable by local Gulf (GCC) passport holders only. However, through

1647-606: The Hong Kong Government. Since 2005, there have been seven REIT listings as at July 2007, most of which, including Sunlight REIT have not enjoyed success because of low yield. Except for The Link and Regal Real Estate Investment Trust , share prices of all but one are significantly below the initial public offering (IPO) price. Hong Kong issuers' use of financial engineering ( interest rate swaps ) to improve initial yields has also been cited as having reduced investors' interest As of July 2012 there are nine REITs listed with

1708-617: The Saudi Capital Market Authority, The regulation did not allow the funds to be traded in the stock market and forced all funds to be structured by a licensed Investment companies by CMA with a presence of a real estate developer and some other key persons. The REIT legislation was introduced by Dubai International Financial Centre (DIFC) to promote the development of REIT's in the UAE by passing The Investment Trust Law No.5 that went into effect on August 6, 2006. This restricts all 'true' REIT structures to be domiciled within

1769-537: The Singapore Exchange has grown to overtake those traditional listing with local assets. S-REITs are regulated as Collective Investment Schemes under the Monetary Authority of Singapore's Code on Collective Investment Schemes, or alternatively as Business Trusts. Some of the regulations that S-REITs have to adhere to includes: S-REITs benefit from tax advantaged status where the tax is payable only at

1830-560: The Special Purpose Investment Companies Act. They are pass-through entities for corporate income tax purposes (i.e., they are not subject to corporate income-tax), but are subject to numerous restrictions. Finnish REITs were established in 2010, when the Finnish parliament passed "the tax exemption law" (Laki eräiden asuntojen vuokraustoimintaa harjoittavien osakeyhtiöiden verohuojennuksesta, 299/2009). Together with

1891-494: The average down payment required for a home buyer in the US increased from 5% to 25%, a decrease of leverage from 20 to 4. To deleverage, one needs to raise cash to pay debt, either from raising capital or selling assets or both. A bank, for example, can cut expenditure, sell liquid assets , absorb off-balance-sheet structured investment vehicles and conduits, or allow its illiquid assets to run off at maturity , which, however, can take

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1952-560: The benefits of owning an interest in the securitised real estate market. The greatest benefit will be that of fast and easy liquidation of investments in the real estate market unlike the traditional way of disposing of real estate. The government and Securities and Exchange Board of India through various notifications is in the process of making it easier to invest in real estate in India directly and indirectly through foreign direct investment, through listed real estate companies and mutual funds. In

2013-564: The budget of 2014, finance minister Arun Jaitley has introduced a law for setting up of REITs. As in 2021, there are three REITs listed in National Stock Exchange of India. These are Embassy, Mindspace and Brookfields. Overall, the shareholding of Indian REITs is skewed towards institutional investors (mostly FPIs), with very minimal contribution from retail investors. CSRC (China Securities Regulatory Commission) and NDRC ( National Development and Reform Commission ) jointly announced

2074-625: The continuing rising of government debt , due to the Great Recession , has been offsetting the deleveraging in the private sectors in many countries. The McKinsey Global Institute defines a significant episode of deleveraging in an economy as one in which the ratio of total debt to GDP declines for at least three consecutive years and falls by 10 percent or more. According to this definition, there have been 45 such episodes of deleveraging since 1930, including: Based on this identification of deleveraging and Carmen Reinhart and Kenneth Rogoff ’s definition for major episodes of financial crisis , it

2135-547: The creation under Eisenhower. As of 2021, at least 39 countries around the world have established REITs. A comprehensive index for the REIT and the global listed property market is the FTSE EPRA/Nareit Global Real Estate Index Series, which was created jointly in October 2001 by the index provider FTSE Group, Nareit and the European Public Real Estate Association (EPRA). As of 29 January 2021,

2196-644: The denied access to credit necessary for operation. Moreover, firms in distress are forced to sell assets quickly to raise cash, causing asset prices to collapse. The pressure of deflation increases the real burden of debt and spreads loss further in the economy. In addition to causing deflation pressure, firms and households deleveraging their balance sheet often increase net savings by cutting expenditures sharply. Households lower consumption, and firms fire employees and halt investment in new projects, causing unemployment rate to rise and even lower demand of assets. Empirically, consumption and GDP often contracts during

2257-654: The establishment of REITs in December 2001. J-REIT securities are traded on the Tokyo Stock Exchange among other exchanges in Japan. A J-REIT (a listed real estate investment trust) is strictly regulated under the Law concerning Investment Trusts and Investment Companies (LITIC) and established as an investment company under the LITIC. In addition to REITs, Japanese law also provides for

2318-639: The establishment of REITs in the Philippines have been in place after the Real Estate Investment Trust Act of 2009 (Republic Act No. 9856) passed into law on December 17, 2009. Its Implementing Rules and Regulations were approved by the Securities and Exchange Commission in May 2010. However, it failed to attract investors due to its restrictive tax policies and high friction cost. Regulations on REITs

2379-577: The first REIT in Ghana in August 1994. HFC Bank has been at the forefront of mortgage financing in Ghana since 1993. It has used various collective investment schemes as well as corporate bonds to finance its mortgage lending activities. Collective Investment Schemes, of which REITs are a part, are regulated by the Securities and Exchange Commission of Ghana. In 2007, the Securities and Exchange Commission (SEC) issued

2440-731: The first set of guidelines for the registration and issuance of requirements for the operation of REITs in Nigeria as detailed in the Investment and Securities Act (ISA). The first REIT, the N50 billion Union Homes Hybrid Real Estate Investment Trust, was launched in September 2008. In November 2015 there were three listed REITS on the Nigerian Stock Exchange : Skye Shelter Fund, Union Home and UPDC. A Haldane McCall REIT did not list after failing to reach

2501-433: The first several years of deleveraging and then recovers, which in some cases cause a fall in total savings in the economy, despite the individuals' higher propensity to save . This is known as the paradox of thrift . According to the theory of leverage cycle of John Geanakoplos and originally by Hyman Minsky , in the absence of intervention, leverage becomes too high in boom times and too low in bust times. As

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2562-818: The global index included 490 stock exchange listed real estate companies from 39 countries representing an equity market capitalization of about $ 1.7 trillion. Around the time of their creation in 1960, the first REITs primarily consisted of mortgage companies. The industry experienced significant expansion in the late 1960s and early 1970s. The growth primarily resulted from the increased use of mREITs in land development and construction deals. The Tax Reform Act of 1976 authorized REITs to be established as corporations in addition to business trusts . The Tax Reform Act of 1986 also impacted REITs. The legislation included new rules designed to prevent taxpayers from using partnerships to shelter their earnings from other sources. Three years later, REITs witnessed significant losses in

2623-502: The initial market downturn. It is part of the process that leads the economy to recession and the bottom of the leverage cycle . Therefore, some economists, including John Geanakoplos , strongly argue that the Federal Reserve should monitor and regulate the system-wide leverage level in the economy, limiting leverage in good times and encouraging higher levels of leverage in bad times, by extending lending facilities. Moreover, it

2684-451: The investor level and not at the REITs level. In addition to REITs, there are ten Business Trusts ("BTs") (similar to REITs but may hold assets that are not conventional and are not subjected to stringent rules as compared to SREITs), and six Stapled Instruments (composed of a stapled Business Trust Unit and a REIT unit), which are listed on the Singapore Exchange. The total market capitalisation of

2745-468: The latest REIT, Cromwell European REIT, listed on 30 November 2017. The first one to be set up being CapitaMall Trust in July 2002. They represent a range of property sectors including retail, office, industrial, hospitality and residential. S-REITs hold a variety of properties in countries including Japan, China, Indonesia and Hong Kong, in addition to local properties. In recent years, foreign assets listing on

2806-481: The listed Trust on Singapore Exchange approximate SGD 100 billion (as at 30 Nov 17). The Securities and Exchange Commission created regulations to establish REITs as an investment vehicle in late 2012, opening the doors for the first REITs to be listed in 2013. There are at least two tens of REITS. Introduced in 2014 to replace the Property Funds for Public Offering (PFPO) scheme, REITs have gained popularity, and

2867-449: The market expects the crisis to last for a considerable length of time. These factors can all contribute to hindering the sources of private capital and the effort of deleveraging. Deleveraging of an economy refers to the simultaneous reduction of leverage level in multiple private and public sectors , lowering the total debt to nominal GDP ratio of the economy. Almost every major financial crisis in modern history has been followed by

2928-559: The minimum 50% subscription in a January 2015 initial public offer amid poor market prospects. By October 2015 there were 33 South African REITS and three non-South African REITs listed on the Johannesburg Stock Exchange , according to the SA REIT Association, which said market capitalization was more than R455 billion. Commonly referred to as Real Estate Investment Fund, the regulations were launched in July 2006 by

2989-417: The need to deleverage causes financial intermediaries to shed assets and stop lending, resulting in a credit crunch and tighter borrowing constraint for business, especially the small to medium-sized enterprises. Many times, this process is accompanied by a flight to quality by the lenders and investors as they seek less risky investment. However, many otherwise sound firms could go out of business due to

3050-413: The ratio of debt to gross domestic product globally has increased by 17 percent after the crisis. According to a McKinsey Global Institute report, there are four archetypes of deleveraging processes: Massive deleveraging in corporate and financial sectors can have serious macro-economic consequences, such as triggering Fisherian debt deflation and slowing GDP growth . In the financial sector,

3111-410: The setting up of and the conduct of a Sri Lankan REITs. Specific provisions have been included for the verification of title and valuation of property that will form part of the assets of the REIT. Amongst the requirements is the mandatory distribution of approximately 90% of income to the unit holders, which is currently not a requirement for any of the listed entities. Further, due to the availability of

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3172-531: The start of pilot projects in REITs on April 30, 2020. This official announcement represents the beginning of REITs in mainland China. As of March 14, 2024, the landscape of China's Real Estate Investment Trusts (REITs) saw a significant advancement with the listing of Huaxia Jinmao Commercial REITs (508017) and Jiashi Wumei Consumer REITs (508011) on the Shanghai Stock Exchange on March 12, followed by Huaxia China Resources Commercial REITs (180601) on

3233-550: The stock market. Retail REIT Taubman Centers Inc. launched the modern era of REITs in 1992 with its creation of the UPREIT. In an UPREIT, the parties of an existing partnership and a REIT become partners in a new "operating partnership". The REIT typically is the general partner and the majority owner of the operating partnership units, and the partners who contributed properties have the right to exchange their operating partnership units for REIT shares or cash. The industry struggled during

3294-537: The tax pass through mechanism to Unit Trusts, REITs also could benefit to be a viable business concept to Sri Lanka that will open new horizons for entrepreneurs to take the real estate industry to greater heights. Bernheim Comofi (now AG Real Estate ) introduced Belgian REITs in 1995 with the constitution of Befimmo . Others REITs in Belgium include Cofinimmo and Ascensio. REITs were introduced in Bulgaria in 2004 with

3355-486: The total market capitalisation has reached THB 85 billion across two million square metres of assets. On 1 August 2020, the Securities and Exchange Commission of Sri Lanka (SEC) announced that REITS will be introduced as an extension of the current Unit Trust Code and the new Rules, which came into effect from 31 July 2020 is in the form of a Gazette Notification published by the SEC. These Rules which are comprehensive, will govern

3416-505: The value of assets and income plummets, a highly leveraged borrower faces heavy losses due to his or her obligation to the service of high levels of debt. If the value of assets falls below the value of debt, the borrower then has a high risk to default . Deleveraging reduces the total amplification of market volatility on the borrower's balance sheet . It means giving up potential gains in good times, in exchange for lower risk of heavy loss and nasty default in bad times. However, precaution

3477-655: Was approved by the Capital Markets Authority in October 2015. The REIT is issued by Stanlib Kenya under the name Fahari I-Reit scheme. The REIT scheme will provide unit holders stable cash inflows from the income generating real estate properties. The unrestricted IPO will be listed on the main investment market segment of the Nairobi Securities Exchange. REITs have been in existence in Ghana since 1994. The Home Finance Company , now HFC Bank , established

3538-676: Was established, which was in 2012. However, tax incentives plans demonstrate an intention of policymakers and lawmakers to boost the competitiveness of the market, and to encourage DIREs to be listed domestically. The Securities and Exchange Commission of Pakistan is in the process of implementing a REIT regulatory framework that will allow full foreign ownership, free movement of capital and unrestricted repatriation of profits. It will curb speculation in Pakistani real estate markets and gives access to small investors who want to diversify into real estate. The Securities and Exchange Commission of Pakistan

3599-854: Was rebranded as the Dexus Property Group after purchasing Deutsche Bank's remaining 50% shareholding. On 27 March 2017, the company was rebranded to Dexus. In April 2022, Dexus purchased AMP Capital 's real estate and domestic infrastructure equity business. Real estate investment trust 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 (mREITs). In November 2014, equity REITs were recognized as

3660-483: Was relaxed in January 2020 which led to the establishment of the first REIT in the country, AREIT Inc. of Ayala Land which had its public offering in August of the same year. However foreign investors still have poor reception towards REITs during that year when there was also a prevailing COVID-19 pandemic . Commonly referred to as S-REITs, there are more than 40 REITs listed on the Singapore Exchange , with

3721-665: Was the first Australian real estate investment trust (LPT) on the Australian stock exchanges (now the Australian Securities Exchange ). REITs which are listed on an exchange were known as Listed Property Trusts (LPTs) until March 2008, distinguishing them from private REITs which are known in Australia as Unlisted Property Trusts. They have since been renamed Australian Real Estate Investment Trusts (A-REITs) in line with international practice. REITs have shown numerous benefits over direct investment including lower tax rates and increased liquidity. There are now more than 70 A-REITs listed on

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