Very soon within two months we are going to get first REIT listed. Even after reading too much in news papers I dont get idea how it will work. Some doubts are following.
Commercial property is giving 7-8% annual return as rent. 90% of rent received will be distributed as dividend.If we add the price appreciation of property with time, return should be more. How this price appreciation component of commercial property will be appropriated by investors.
Tax implications in the hands of investor/ REIT for regular income or capital gain.
Will there be something like NAV ? It will be traded on exchange at NAV or market will decide.
As per news one should expect 7-8% return. As per my understanding if I invest myself in commercial office space I can expect 7-8% as rent + inflation5-6% = 12-14%. Why is it less ?
Sorry to be naive here. Please help to understand REIT.