1202020 UNIT Monash Week 12 Newsletter Property Investment (REITS)
httpsmailchimp21c0683e7da5unit-monash-week-12-newsletter-property-investment-reits 12
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UNIT MonashWeekly Newsletter
Semester 2 Week 12 2019
Hey ltltFirst Namegtgt
We introduce to you the new look of the UNIT Monash newsletter
We are continually trying to improve on how we can best meet your needs and provide relevant and useful
content for our valued members To ensure this is the case we now include a link at the bottom of the
newsletter for you to provide feedback to us If you want us to cover a topic or want to tell us what you
think we are doing right please fill it out We want to thank you in advance for your contributions
The focus of this newsletter is to introduce you to the real estate asset class and how a student with
limited funds can get a piece of the action
Check out the week 12 newsletter below for the details
WEEKLY INFO WRAP
Introduction to Investing in Real Estate (Real Estate Investment Trusts)
Real estate agent knocks on my door
Real estate agent Hi I am helping owners sell their home and I amhellip
Me Quickly slams door shut and contemplate my inability to afford a home
Overview
Are you thinking of investing in property or owning a home Well for some a direct real estate investment
may be effortless However for many of us it may seem beyond our reach at the moment due to the
expensive and competitive nature of the property market That is where Real Estate Investment Trusts
commonly known as REITs emerge Allow me to enrich you in the world of REITs
Similar to managed funds REITs are an actively managed pool of investorsrsquo money through a portfolio of
real estate assets whether it be residential commercial or industrial In Australia REITs are better known
as A-REITs (Australian Real Estate Investment Trusts) and are traded on the ASX The A-REITs are
usually diversified across various regions and tenant types For example some A-REITs specialise in a
particular sector or multiple sectors An A-REIT might solely invest in shopping centres while another A-
REIT may invest in both offices and industrial buildings)
Benefits
So why do some investors entrust their money with REITs over direct investment
1 REITs generate income through rent and capital growth similar to direct investment but without the
added need to purchase the physical property
2 Investors are provided with more investment opportunities and gain exposure to various sectors of
the property market at a larger scale through a real estate fund manager
3 A-REITs are traded on the ASX and offer high liquidity compared to direct property investments
4 Due to the unique taxation structure the ATO allows A-REITs to pass on tax-deferred distributions
to investors
Risks
There are many more benefits but investors should not overlook the risk profile associated with REITs
and exercise their due diligence on the management team of REITs REITs may borrow at a high cost and
risk default due to inability to make interest repayments or they may have purchased an overvalued
property which subsequently drops in asset value
Scope
Before you jump the gun and include A-REITs into your portfolio different types of A-REITs exist
Equity REITs
Mortgage REITs
Hybrid REITs
Equity REITs are the most common type of A-REIT in the ASX These REITs acquire manage build
renovate and sell real estates They may focus on a particular sector of the market or diversify across
several sectors Equity REITs generate income from rent by leasing offices industries residential
properties or shopping centres
In comparison mortgage REITs adopt a different business model which owns and invest in property
mortgages These REITs generate income through mortgages and mortgage-backed securities that
finance real estates Hence mortgage REITs do not own a title in property
Stapled securities funds are another type of REITs and a form of hybrid REIT structure Some Australian
REITs adopt a stapled securities structure where a company share and a trust unit is ldquostapledrdquo together
so they cannot be bought or sold separately Therefore investors gain exposure to both the share
component (manages and develops the asset) and trust component (owns real estate assets) In this
case the trust includes dividends from the company and distributions from the trust separately in their
income tax return
Need to know
Right so you are still reading this and want to find out more about REITs As mentioned above A-REITs
are traded on the ASX and the three main elements to understanding REITs are
Location of assets
Type of asset
Companyrsquos debt and development prospects relative to the market
Investors should also consider the Weighted Average Lease Expiry (WALE) of commercial REITs The
WALE calculates the average expiry period of the leases within the property The figure shows the stability
of the REIT and indicates the current and future income stream the property provides Ultimately a longer
WALE attracts investors
As a rule of thumb for all other investments and trading readers are also encouraged to dot the Irsquos and
cross the Trsquos when it comes to REITs
Click here for a list of A-REITs in Australia
WEEKLY GLOBAL BREAKDOWN
The benchmark SampPASX200 index finished down 052 per cent on Friday while the broader All
Subscribe Past Issues RSSTranslate
1202020 UNIT Monash Week 12 Newsletter Property Investment (REITS)
httpsmailchimp21c0683e7da5unit-monash-week-12-newsletter-property-investment-reits 22
Ordinaries was down 049 per cent
Every sector was in the red with the consumer staples sector the worst hit down 12 per cent Woolworths
fell 12 per cent and Coles dropped 16 per cent The big banks were all lower with ANZ dropping 07 per
cent NAB down 04 per cent Westpac down 08 per cent and Commonwealth down 06 per cent In the
mining sector BHP dipped 02 per cent but Rio Tinto rose 08 per cent and Fortescue Metals climbed 16
per cent
Chances for a fourth rate cut in November are unlikely following a surprise dip in the unemployment rate
announced on Thursday Therefore Reserve Bank Governor Philip Lowe said at an International
Monetary Fund event in Washington Friday morning not to assume further rate cuts
For the week the market finished up 065 per cent The AUD is buying 6832 US cents from 6783 US
cents on Thursday
Despite a mixed trading week most major indices managed to post modest gains as third-quarter
earnings season kicks off The SampP500 and NASDAQ are up 05 and 04 per cent respectively while the
Dow Jones Industrial Average is down 02 per cent The majority of the gains were recorded on Tuesday
before withdrawing back later in the week Optimism towards positive earnings reports conflicted with
weak economic data as industrial production fell even more in September US retail sales also declined
unexpectedly dropping 03 per cent
The 10-year Treasury note ended the week modestly lower
The Nikkei 225 Stock Average rose 32 per cent over the holiday-shortened trading week For the year to
date the Nikkei 225 is ahead 12 per cent The yen weakened slightly and closed above yen108 per USD on
Friday
Japanrsquos Statistics Bureau data released on Friday showed that the core CPI fell to its lowest level since
April 2017 adding pressure for the Bank of Japan (BoJ) to ease monetary policy Annualised core
inflation which excludes food prices dipped to 03 per cent in September from 05 per cent in August
A Reuters survey of 41 economists which came out prior to the CPI release demonstrated that 85 per
cent believe the BoJrsquos next policy move will be additional stimulus and roughly two-thirds believe the
central bank will act at the October 30-31 policy meeting Haruhiko Kuroda the central bank governor has
affirmed that policymakers are edging closer to expanding stimulus given the economic damage caused
by the prolonged US- China trade war slowdown in global economic growth and the possible impact of
the October 1 consumption tax increase The poll also showed that analysts expect Japanrsquos economy to
contract in the current quarter Prime Minister Shinzo Abe has pledged to take ldquoall possible stepsrdquo to
counter a steep economic slowdown
Stocks in China posted a weekly loss after the countryrsquos third-quarter economic growth missed forecasts
underscoring the protracted toll of the US trade battle and raising the recession risk for the global
economy The benchmark Shanghai Composite Index fell 12 per cent for the week and the large-cap CSI
300 Index declined 11 per cent
Despite the slowdown Chinarsquos 62 per cent year-to-date expansion suggests that Beijing can still hit its
full-year growth target of 60 per cent to 65 per cent Nevertheless the latest quarterrsquos GDP marks
Chinarsquos slowest growth pace since 1992
European equities delivered mixed results primarily due to geopolitical concerns The UK and the
European Union managed to strike a tentative deal regarding Brexit However the good news was
outweighed by concerns that UK Prime Minister Boris Johnson would not be able to convince the
Parliament to accept the deal The pan-European STOXX Europe 600 Index traded in a range and UKrsquos
FTSE 100 Index dropped 1 per cent The German DAX however managed to gain 14 per cent
The British pound jumped during the week as Brexit talks advance However the optimism was short-lived
as Northern Irelandrsquos Democratic Unionist Party said it refuses to support the agreement The
Parliamentary meeting to vote on Brexit occurred on Saturday with the MPs backing a move to delay
approval of the deal reasoning that approval should be withheld until all the necessary legislation required
to implement it had been passed
Questions and Feedback
Questions
As we mentioned in previous emails - we started UNIT Monash with the vision of educating the student
community in investing and trading to one day strive for financial independence
We want to create a new concept of peer-to-peer communications about investing and trading Theres a
lot of value in sharing experiences having opinions and shedding light on new ideas Feel free to get in
contact with us via Facebook if you have any enquiries about investment trading or our upcoming events
Feedback
We consistently strive to improve on how we can best meet your needs and provide relevant and useful
content for you our valued members If you want us to cover a topic or want to tell us what you think we
are doing right please click here to fill out our one-minute feedback form
We want to thank you in advance for your contributions
Regards
UNIT Monash
SPONSORS AND PARTNERS
Disclaimer
The authors of this publication are not qualified to provide financial or investment advice and as such the
content provided should not be construed in this manner All information is intended purely for educational
purposes and is provided for the personal interest of UNIT members The opinions expressed within the
weekly newsletter do not reflect those of UNIT as an organisation its partners or its sponsors
This email was sent to ltltEmail Addressgtgt why did I get this unsubscribe from this list update subscription preferences
University Network of Investing and Trading middot Monash University Wellington Road middot Clayton Victoria 3800 middot Australia
Subscribe Past Issues RSSTranslate
1202020 UNIT Monash Week 12 Newsletter Property Investment (REITS)
httpsmailchimp21c0683e7da5unit-monash-week-12-newsletter-property-investment-reits 22
Ordinaries was down 049 per cent
Every sector was in the red with the consumer staples sector the worst hit down 12 per cent Woolworths
fell 12 per cent and Coles dropped 16 per cent The big banks were all lower with ANZ dropping 07 per
cent NAB down 04 per cent Westpac down 08 per cent and Commonwealth down 06 per cent In the
mining sector BHP dipped 02 per cent but Rio Tinto rose 08 per cent and Fortescue Metals climbed 16
per cent
Chances for a fourth rate cut in November are unlikely following a surprise dip in the unemployment rate
announced on Thursday Therefore Reserve Bank Governor Philip Lowe said at an International
Monetary Fund event in Washington Friday morning not to assume further rate cuts
For the week the market finished up 065 per cent The AUD is buying 6832 US cents from 6783 US
cents on Thursday
Despite a mixed trading week most major indices managed to post modest gains as third-quarter
earnings season kicks off The SampP500 and NASDAQ are up 05 and 04 per cent respectively while the
Dow Jones Industrial Average is down 02 per cent The majority of the gains were recorded on Tuesday
before withdrawing back later in the week Optimism towards positive earnings reports conflicted with
weak economic data as industrial production fell even more in September US retail sales also declined
unexpectedly dropping 03 per cent
The 10-year Treasury note ended the week modestly lower
The Nikkei 225 Stock Average rose 32 per cent over the holiday-shortened trading week For the year to
date the Nikkei 225 is ahead 12 per cent The yen weakened slightly and closed above yen108 per USD on
Friday
Japanrsquos Statistics Bureau data released on Friday showed that the core CPI fell to its lowest level since
April 2017 adding pressure for the Bank of Japan (BoJ) to ease monetary policy Annualised core
inflation which excludes food prices dipped to 03 per cent in September from 05 per cent in August
A Reuters survey of 41 economists which came out prior to the CPI release demonstrated that 85 per
cent believe the BoJrsquos next policy move will be additional stimulus and roughly two-thirds believe the
central bank will act at the October 30-31 policy meeting Haruhiko Kuroda the central bank governor has
affirmed that policymakers are edging closer to expanding stimulus given the economic damage caused
by the prolonged US- China trade war slowdown in global economic growth and the possible impact of
the October 1 consumption tax increase The poll also showed that analysts expect Japanrsquos economy to
contract in the current quarter Prime Minister Shinzo Abe has pledged to take ldquoall possible stepsrdquo to
counter a steep economic slowdown
Stocks in China posted a weekly loss after the countryrsquos third-quarter economic growth missed forecasts
underscoring the protracted toll of the US trade battle and raising the recession risk for the global
economy The benchmark Shanghai Composite Index fell 12 per cent for the week and the large-cap CSI
300 Index declined 11 per cent
Despite the slowdown Chinarsquos 62 per cent year-to-date expansion suggests that Beijing can still hit its
full-year growth target of 60 per cent to 65 per cent Nevertheless the latest quarterrsquos GDP marks
Chinarsquos slowest growth pace since 1992
European equities delivered mixed results primarily due to geopolitical concerns The UK and the
European Union managed to strike a tentative deal regarding Brexit However the good news was
outweighed by concerns that UK Prime Minister Boris Johnson would not be able to convince the
Parliament to accept the deal The pan-European STOXX Europe 600 Index traded in a range and UKrsquos
FTSE 100 Index dropped 1 per cent The German DAX however managed to gain 14 per cent
The British pound jumped during the week as Brexit talks advance However the optimism was short-lived
as Northern Irelandrsquos Democratic Unionist Party said it refuses to support the agreement The
Parliamentary meeting to vote on Brexit occurred on Saturday with the MPs backing a move to delay
approval of the deal reasoning that approval should be withheld until all the necessary legislation required
to implement it had been passed
Questions and Feedback
Questions
As we mentioned in previous emails - we started UNIT Monash with the vision of educating the student
community in investing and trading to one day strive for financial independence
We want to create a new concept of peer-to-peer communications about investing and trading Theres a
lot of value in sharing experiences having opinions and shedding light on new ideas Feel free to get in
contact with us via Facebook if you have any enquiries about investment trading or our upcoming events
Feedback
We consistently strive to improve on how we can best meet your needs and provide relevant and useful
content for you our valued members If you want us to cover a topic or want to tell us what you think we
are doing right please click here to fill out our one-minute feedback form
We want to thank you in advance for your contributions
Regards
UNIT Monash
SPONSORS AND PARTNERS
Disclaimer
The authors of this publication are not qualified to provide financial or investment advice and as such the
content provided should not be construed in this manner All information is intended purely for educational
purposes and is provided for the personal interest of UNIT members The opinions expressed within the
weekly newsletter do not reflect those of UNIT as an organisation its partners or its sponsors
This email was sent to ltltEmail Addressgtgt why did I get this unsubscribe from this list update subscription preferences
University Network of Investing and Trading middot Monash University Wellington Road middot Clayton Victoria 3800 middot Australia
Subscribe Past Issues RSSTranslate