A REIT, or real estate investment trust, is a group of properties that are bundled and packaged together under a structure that allows it to be listed on a stock exchange as a tradeable security.

The REIT earns a steady rental income from leases signed with their its tenants. REITs are mandated by guidelines as to how they should operate in order to enjoy full tax transparency (i.e. they do not have to pay corporate taxes).

One of these requirements is that a REIT needs to pay out at least 90% of its net profit as distributions to unitholders.

Another is for regular quarterly reporting that is in compliance with the rules and regulations as stipulated by the Singapore Exchange. A third requirement is that REITs’ gearing level (i.e. total borrowings divided by total assets) cannot exceed 45%.