Understanding REITs for everyone (the knowledge sharing Hub and pooling of resources)

I've created this post because I feel that it will be useful for my own learning of understanding REITs in a more structured manner, and it could possibly help many community members as well. If you're a newbie, I hope this post will help you. If you're a seasoned REIT investor, you can contribute what you know and share in the comments below.

Personally, one of the quickest way to learn is to 1) identify the associated keywords 2) diving down deeper into what keywords mean and 3) understanding the keywords through case studies to understand the different contexts.

For entirely new investors who need a succinct and concise breakdown of what a REIT is, use this link for a crash course: https://www.moneysense.gov.sg/articles/201...

What’s financing in REITs?
A REIT has to buy assets, lease out to tenants, collect rental income and distribute its earnings back to unit holders. So where does it get the money to buy such assets? Answer is either through debt or equity. 

-Types of Equity Financing in REITs: https://www.theancientbabylonians.com/3-ty...
-Types of Debt Financing in REITs: https://www.theancientbabylonians.com/4-ty...

Why the need for REITs to raise equity?
Equity fundraising through a rights issue is done for a few reasons. The most common one is to fund growth. Real estate investment trusts (REITs) with growth plans and a strong pipeline from sponsors are more likely to ask unitholders for cash through preferential EFRs or rights issues.

Other than funding acquisitions, debt and declining capital values may also prompt REITs to ask their unitholders for cash. If debt levels are too high — the regulatory ceiling for REITs is 45% — and capital values fall, REITs may need to raise equity.
Source: https://www.theedgesingapore.com/reits-are...

Commonly associated keywords & jargons with REITs:
- Rights issue: https://dollarsandsense.sg/applying-for-re...
- Private Placement: https://www.fool.sg/2018/06/20/what-you-ne...
- Accretive Acquisition: https://www.reitsweek.com/2012/12/accretiv...
- Dilutive Acquisition: https://www.reitsweek.com/2012/12/dilutive...
- [Accretive Acquisition] Yield Accretive vs DPU Accretive: https://www.probutterfly.com/blog/reit-pla...
- Gearing ratio: https://www.investopedia.com/terms/g/geari...
- Interest Rates & Effect on REITs: https://www.theedgesingapore.com/how-will-...
- REIT preferred securities: https://www.advisorperspectives.com/commen...
- RevPar: https://www.investopedia.com/terms/r/revpa...
- Net Property Income (NPI): https://www.reitsweek.com/2012/12/npi.html
- Capitalisation rate: https://heartlandboy.com/understand-reit-j...
- Sale and leaseback: https://heartlandboy.com/understand-reit-j...
- Rental support/Guarantee: https://heartlandboy.com/understand-reit-j...
- Asset Enhancement Initiative: https://heartlandboy.com/understand-reit-j...
- Weighted Average Lease Expiry (WALE): https://www.reitsweek.com/2013/05/weighted...
- Triple Net Lease: https://heartlandboy.com/understand-reit-j...
- Average All-In Cost Of Debt: https://heartlandboy.com/understand-reit-j...
- Business Trust vs REIT:p https://sg.finance.yahoo.com/news/differen...
- Preferential offering: http://bullythebear.blogspot.com/2016/08/t...

Some recent case studies:
1. OUE Com REIT & OUE Hos Trust: https://www.investingnote.com/posts/1354421
2. Capitaland & Ascendas Sing Bridge: https://www.probutterfly.com/blog/quick-th...
3. Keppel KBS REIT: https://financialhorse.com/rights-issues-f...

After all, this is a non-exhaustive list. If I’ve missed out important things or want to value add, please feel free to add it in the comments! infographics are welcomed.

Hope this is useful to all!

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13 likes
3 comments
BobTravels

Thanks, that is very comprehensive.

YokeMing

Reply to @BobTravels : hope that helps! of course it's not everything :)

lynlynnakamori

newbie here...thank you...:))

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