What percentage of reits funds invest in real estate?
Generally speaking, not less than 80%. In the market, most reits funds invest more than 80% in infrastructure projects, and the remaining 20% in safer assets such as bonds and money market instruments. Then 90% of the annual distributable amount is distributed to investors in the form of cash dividends, so that investors can enjoy the benefits of this infrastructure project.
How to screen reits funds?
1, bottom project
To some extent, whether the project is good or not is directly related to whether this reits can make money.
2. The nature of the project
According to the different ownership characteristics of basic assets, reits in China are divided into management category and property category.
Reits' income from expressway and sewage treatment will be relatively stable, but because there is only management right and no property right, the value-added income is not as obvious as property right.
For property rights reits such as industrial parks, the underlying assets of the project itself will appreciate more easily, so the appreciation will be more obvious.
3. Proportion of strategic layout
The original owner or sponsor is generally the strategic distributor of public offering reits funds. Generally speaking, the proportion of strategic allocation is not less than 20% of the number of funds sold. The higher the proportion of strategic allocation, the more confident you are in your own project.
If the original owner has no confidence in this project, we can predict that this project may not be very good.
4. Distribution rate
As we said earlier, reits require mandatory dividends every year, and 90% of the distributable amount needs to be distributed to investors in the form of cash dividends. This allocation rate can reflect the profitability of the project itself, so this allocation rate should not be lower than 4% in principle. The same can also be found in the fund prospectus.
5. Internal rate of return
Internal rate of return (IRR), also known as return on investment, as the name implies, is the return on investment. Generally speaking, the higher this, the better.
The above are some contents of reits, so you can pay attention to them.