Reits is a trust organization established in accordance with legal procedures. It raises investors' funds by issuing stocks or fund units, and professional institutions invest in the real estate industry, distributing more than 90% of the net income after tax to investors. Reits will distribute the income at least once a year under the dividend conditions stipulated in the prospectus, and the distribution ratio of each income shall not be less than 90% of the annual distributable amount of the combined fund.

Fund dividends must meet the following three conditions:

1, the fund can only be distributed after the current year's income makes up for the previous year's loss.

2. After the distribution of fund income, the unit net value cannot be lower than the face value.

3. If the fund investment has a net loss in the current period, it cannot be distributed. Fund dividends can be divided into two ways: cash dividends and dividend dividends. After dividends, investors' total assets will not change, and their net fund value will be lowered accordingly.

I. Global Characteristics of REITs and China Characteristics To understand the logic of building REITs in China, we need to sort out the characteristics of existing REITs first. As of July 20 18, 4 1 countries or regions in the world have introduced REITs system. At present, the United States, Britain, Australia, Japan, Singapore, China and Hongkong 12 countries or regions have established relatively perfect REITs system. The REITs research group of Guanghua College of Peking University has studied the REITs system in these 12 countries or regions, and sorted out three characteristics, which constitute the core layer of REITs system.

First, the requirements of income and asset structure, that is, REITs should invest in mature real estate assets, with long-term stable cash flow generated by real estate as the main source of income.

Second, REITs are forced to distribute their income. 12 countries or regions have stipulated the compulsory distribution system. The United States, Singapore, Britain and other countries clearly stipulate that the dividend ratio of general income such as rent should not be less than 90%, while Australia and Canada tax the non-dividend part at the highest tax rate to ensure that REITs pay dividends to investors.

Third, implement preferential tax policies at the REITs level. General income based on long-term stable cash flow of real estate is exempt from income tax according to REITs level. In 12 countries and regions, the principle of tax neutrality is almost maintained, and general income such as rental income is exempted from REITs income tax, thus avoiding double taxation on cash flow initiated by investors. In addition to the three core features, the research group also summed up five systems widely adopted by most countries and regions.