Such investments allow a stable dividend yield to be received, with the commensurate reliability of financial instruments.
The Chairman of the Board of Rietumu Asset Management Pavel Poctarenko The “REIT Basket” portfolio provides an opportunity to invest in different classes of prospective real estate worldwide – hotels, office centres, residential buildings, warehouses, medical institutions, etc.
The structures that own these facilities undertake, in accordance with the law, to pay most of their profit in the form of dividends to holders of the securities – from 90%. This significant factor, in combination with the growth prospects of the financial instruments under the influence of growing prices for real estate, as well as high liquidity of this class of securities, makes such investment increasingly more popular worldwide.
“In the current conditions of low interest rates, the possibilities of receiving relevant income at the expense of traditional bonds are considerably limited. On the other hand, stocks, which allow more to be earned, are quite a risky instrument. As a result, the demand for alternative investments, including in the real estate sector, which make use of both advantages – stability and the high rate of return, is growing,” said the Chairman of the Board of Rietumu Asset Management Pavel Poctarenko.
He states that such securities also have a number of advantages in comparison with the de facto acquisition of real estate. An investor is relieved from the necessity to be engaged in maintenance of the real estate, its lease or repair, is not encumbered with all kinds of public utility and insurance payments. A significant plus is also high liquidity – securities can be sold during one trading session.
As to the rate of return, the dynamics of the FTSE NAREIT market standard – All Equity REITS Total Return Index during the last 10 years shows a gain of 6.59% p.a., and since 2009 (after the mortgage crisis) it has been 21.09% p.a.
When forming the “REIT Basket” portfolio, RAM specialists devote special attention to diversification and investments into the most prospective segments. According to Pavel Poctarenko, currently, in view of Brexit and the prospect of the possible closure of the common European market for Great Britain, the demand for office premises in Dublin and Frankfurt is growing. The global tendency of growth in the field of e-commerce stimulates the need for warehouse areas, cloud technologies contribute to the demand for premises for servers, popularity of tourism – for hotels and spa centres, and the growth of life expectancy of the population in civilised countries – for medical institutions and care homes.
“The real estate portfolio is also attractive due to its comparative simplicity. Even when not being a specialist in finances, a person can independently outline tendencies in this area and follow them on his own,” emphasised the Chairman of the Board of RAM.
The “REIT Basket” portfolio is formed for each customer of Rietumu Asset Management individually, with account of his preferences, as well as according to the results of analysis of financial performance, stability and rate of return of specific securities.
The currency of the portfolio can be US dollars (global market) or euros (European market). The minimal volume of investments is USD/EUR 100 000, the recommended optimal investment period is from three years and more.
For the first time, REIT (Real Estate Investment Trust) investment funds appeared in the USA, where in 1960 President Dwight D. Eisenhower signed legislation, which introduced conduit tax treatment for real estate investment trusts. By forwarding the bulk of their profit for paying dividends to investors, real estate owners are exempt from the taxation of such incomes on a corporate level. At present, funds of such type are enjoying growing popularity in Europe and are starting to appear in other regions of the world as well. Eleonora Gailisha Mass Media and Public Relations
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