REITs

REITs on TSE

Update : Aug. 01, 2011

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In November 2000, amendments made to the Investment Trust & Investment Corporation Law expanded the allowable use of capital by investment trusts to include real estate, thereby making funds composed on a real estate investment trust schematic possible. In March 2001, TSE created a listing system for REITs to be traded on its market, and the first two REITs were listed on September 10, 2001.

REIT News

2011/7/27 Japan's Post-quake RE Market , Tokyo Stock Exchange (Reuters Insider)
2011/7/27 An Analyst's View of the J-REIT Market Today and Tomorrow, Tokyo Stock Exchange (Reuters Insider)
2011/7/27 The Appeal of J-REIT Investment, Tokyo Stock Exchange (Reuters Insider)

What are REITs?

REITs (Real Estate Investment Trusts) are products which gather capital from a large number of investors, purchase real-estate and return rent and proceeds from sales produced by such purchases as dividends to investors.
REITs are able to be traded on the TSE market (both market and limit orders are available), with investment securities (equivalent to stock certificates) issued to investors, and securities codes allocated in the same way as for stocks.

With the arrival of REITs, it has become possible for individuals to invest in real-estate with comparatively low amounts of capital.

What are the distinguishing characteristics of REITs?

Listed on Exchanges

REITs can be traded on the TSE market through securities companies all over Japan in the same way as stocks. Internet-trading is also possible via some securities companies. (trading possible with securities code)

Risk Distribution, Real-Estate Management by Professionals

Real-estate professionals manage assets by investing in multiple properties, thus diversifying risk.

Stable dividends, Comparatively High Yields

Dividends are produced from the rent, etc. of multiple properties, thus stable dividends and comparatively high yields can be expected.

Investment Possible with Relatively Low Amounts of Capital

Investment is possible starting from approximately JPY 100,000, making REITs more accessible than actual real-estate investment.

Comparison of Stocks, REITs, and other Securitized Real Estate Products
Stocks REITs Other
Place of Purchase •Purchase and sale possible at Exchange (through securities companies all over Japan)
•Market and Limit Orders possible
Same as Left Certain Real Estate Companies, etc.
Conversion Method •Purchase and sale possible at Exchange (through securities company all over Japan)
•Market and Limit Orders possible
Same as Left Redemption at Maturity Negotiated Transaction
Relative Yield Low High Medium
Taxation Capital gain taxes same as stocks, etc. Same as Left Different from stocks

Points of Caution when Investing

There is the possibility of a fall in prices and other risks.

•A price fluctuation risk exists due to the fact that REITs are traded in the market. Thus, the price may fall lower than the initial purchase price.

•REITs are influenced by a number of economic factors, including the real estate rental market and interest rates. It is possible that REIT prices will fall and dividends will decrease.

•REITs can be traded on the TSE market through securities companies all over Japan in the same way as stocks. Internet-trading is also possible via some securities companies. (trading possible with securities code)

•REITs are affected by increases in costs due to earthquakes or fires, legislative/taxation changes, and other factors affecting individual properties. Losses due to bankruptcy of the investment trust are also possible.

•REITs will be delisted should they fall under the delisting criteria specified by the Exchange.

•Fees are charged when conducting transactions. Also, capital gains tax may apply when making a sale, and other taxes may apply to the receipt of dividends.

What types of issues exist?

Please refer to the following page for a list of REITs on TSE.

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