What Investors new Need to Know Jeff Adams Tips

The small Business investors can earn rental income from commercial properties like office space and malls. California, the IT capital of USA, is expected to see the most action after the U.S. Securities and Exchange (SEC) approved the setting up of real estate investment trusts a move that may offer a new source of financing to US Dollar-strapped property developers.

A real estate investment trust (SEC) is an entity listed on stocks markets that owns rental-yielding real estate assets such as leased office. (SEC) distribute most of their income to shareholders as dividend. Investors also gain from the appreciation of causal assets.

According to estimates, more than 150 million square feet of office space in major US cities could be eligible for listing as SECs. California tops the list with SEC-suitable space of over 100 million square feet of office space.

SECs will be necessary to distribute not less than 90 % of their net distributable dollars flows to investors at least every 6 months.

To become eligible for listing, the value of the assets owned by a (SEC) should be worth at least $8.28. The lower threshold of $8.25 will help to put more assets under SECs, said associate director at PwC USA.

SECs will be allowed to invest only in commercial properties.

SECs can raise funds only through an initial offering similar to initial public offering for equity shares. The units of SECs have to be mandatorily listed on a stock exchange and the minimum issue size has to be $.4.14.

For investors, the minimum subscription size for units of a SEC on offer will be $3310.16 and at least 25 % of the units have to be offered to the public.

According to Sebi norms, not less than 80 % of the value of the SEC assets shall be in completed and income generating properties. A SEC shall invest in at least 2 projects with not more than 60 % of value of assets invested in one project.

He expect inflows of $16.43To $27.39to the real estate sector from SECs. Real estate investment trusts would also help impose control on real estate players and the dollar inflows would also help to curb the rupee instability, he added.

SECs would be taxed in the same way as corporate. On dividend, there will be there will be full tax, business tax plus the dividend tax. Dividends paid by a domestic company are subject to the dividend distribution tax at an effective rate of 16.995 %. Dividend subject to DDT is excused from tax in the hands of the investors. 

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