What is a REIT?

A REIT, short for Real Estate Investment Trust, is essentially a company that owns a portfolio of properties. The company then hires a property manager to manage the day-to-day operations at the properties, such as collecting rents, negotiating tenant contracts and finding tenants.
When investing in a REIT, you are becoming a beneficiary of the trust that owns the assets, in the case of FCT, the Singapore properties and units in H-REIT.

Typical structure of a REIT

Now let’s discuss a typical structure of a REIT using Frasers Centrepoint Trust (FCT) as an example. The diagram below is a clipping from FCT’s Annual Report. It shows the relationship between the different players, and the difference between these groups: unitholders (you), property manager, REIT manager, and trustee.

Source: FCT 2014 Annual Report, author’s own input

As a unitholder, you are legally entitled to collect tax-free quarterly distributions (dividends). ...