Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) are funds that invest in real estate. The DFM REITs platform offers greater diversification for investors to efficiently access rental income streams from wide-ranging, underlying real estate assets without buying it or spending large amounts of capital. The DFM REITs platform enables issuers to raise capital from their property without selling it, through its income stream.
The first REIT issuance on DFM is the Al Mal Capital REIT IPO.
Benefits of REITs for investors
Liquidity
Investment in a listed REIT provides the ability to buy/sell for tactical asset allocation, and simple portfolio rebalancing.
Income & Long-Term Growth
REITs provide competitive and stable long-term rates of return that complement the returns from other income-generating assets.
High Dividend Yield
Dividends and wealth accumulation
Regular income from rents
Reduced revenue volatility
Diversification
More diversified portfolio
Higher risk-adjusted returns
Alternative investment in tangible assets
Inflation Hedge
Real estate rents and values tend to increase when prices do. This supports REIT dividend growth and provides a reliable stream of income even during inflationary periods.
Benefits of REITs for companies
Raise Capital
REITs enable companies to raise capital for future expansion without selling a stake of the holding company itself.
Leverage
Companies can leverage on their real estate assets by creating a REIT and raising capital through the partial sale of the REIT.
Transparency
Enhanced corporate governance and disclosure standards aligned with shareholders’ interests and audited financial reports.
Expansion
Opportunity to raise further capital to purchase more real estate assets by selling part of the units to new investments (Private REITs) or to the public (Public REITs).
Reduce Risk
Establishing a REIT opens the door for other investors to participate in the ownership of the real estate assets.
REITs can be traded on DFM similar to any listed security by placing the selling or buying orders through the broker.