Posted: 30 Aug 2015 12:00 PM PDT

A man on the phone inside the Shanghai Stock Exchange building at the Pudong financial district in Shanghai

After yet another drop in the Shanghai stock market and Hang Seng index on August 6, Daniel Chang heard his cell phone ping. The real-estate agent was on a business trip in Shanghai, and he was mid-bite during a dinner when he saw his phone light up from a message on his app, WeChat.

It was a Chinese client concerned over a $6 million property she was about to buy in New York City. She was visiting New York at the time.

"I don't know if I can do this," she told him over voicemail. "I might have to back out."

She wanted some time to reconsider, she said, and maybe recoup her losses on the Chinese stock. She was considering dropping the $600,000 she had already put down on the cooperative — she had already lost as much on the stock market.

Then, over the course of a week, the Shanghai Composite had a brief and unsteady rise, while the yuan devalued by 3.2%. Chang's client surveyed the apartment one more time.

She closed the deal.

screen-shot-2015-08-26-at-12.41

Chang's client is one of the group of wealthy Chinese caught in between a rock and a hard place: Leave their assets in China to potentially weather additional market volatility and yuan devaluations — or put it in real estate that is now more expensive than just a few weeks earlier.

"Lots of my clients have been hit heavily by the equity market," Chang, who was once a vice president at HSBC's private bank, told Business Insider through a series of interviews. "But that only makes them more determined to diversify out of China."

The chaos of the past few weeks is likely to lead to an acceleration in the rate of real-estate purchases by wealthy Chinese buyers in the US and elsewhere.

"[Chinese] Investors who were looking at investing overseas may bring forward their purchases," James MacDonald, head of Savills Research in China, wrote in an email to Business Insider. "While some of those that may not have been considering the purchase of property in the U.S. may now look at doing so."

The Chinese see US real estate as a relatively moderate risk, high-return investment, Svenja Gudell, the chief economist at real-estate-research site Zillow, told Business Insider. Especially if buyers anticipate further RMB devaluation and market volatility.

Wealthy Chinese are already the largest group of foreign real-estate buyers in the US, with 16% of the single homes and condominiums purchased by foreign buyers snapped up by Chinese last year, according to the US National Homebuyers Association. They were trailed by Canadians, who bought 14% of homes.

These houses are typically more expensive properties, worth an average $831,800. Domestic buyers average $345,800 on a new single-family home, according to the US Census Bureau.

Brokers in the US can see the shifting sentiment among their Chinese real-estate clients.

Emma Hao, a broker for Douglas Elliman who specializes in Chinese clients, told Business Insider she's already felt an increase in urgency among her buyers to purchase property in the US before the yuan devalues further.

"Because they are insecure about the economy and the politics, with the RMB devaluation, the stock market got mashed, and the real estate in China is a big bubble — there is nowhere to go."

Chinese homebuyers also like the US real-estate market as a base for children who have been educated abroad, and as way to diversify holdings.

Andrew Wu, a real-estate agent at Daniel Gale Sotheby's who caters to Chinese luxury-real-estate buyers in Long Island, told Business Insider: "They're looking for a safe haven, and the real-estate market has always been looked upon as a safe haven for Chinese buyers."

The US is also seen as more politically and socially stable, according to Hao. Chinese President Xi Jingping started focusing on an anti-graft campaign back in November.

Many of China's rich have ties to the political figures, and many will look for somewhere to stay away from government scrutiny, Hao said.

"Because of the crackdown, many people got thrown into prison, and the political people are always connected to the rich people — they do business. They need their help," she said. "People worry about their own position."

More and more Chinese buyers will also be eyeing residential property as an investment, according to Gudell, the chief economist at Zillow.

She said she expects to see a different kind of Chinese buyer seeking property in the US: A reduction in buyers looking for homes, but an increase in those looking for investment properties.

"Where they are buying will also be different. The investor will buy in higher-tier neighborhoods, such as New York or Los Angeles," she said.

Chinese individuals are also being actively encouraged to buy abroad by the government.

Thus far, Chinese individuals have been allowed to convert $50,000 into other currencies annually — though there are ways to skirt the regulation.

That is about to change, with the Chinese government readying the launch of the Qualified Domestic Individual Investor program.

The QDII2 is an overseas-investment scheme that would allow Chinese citizens to invest overseas directly. Those with at least $160,000 in financial assets qualify.

The program is likely to launch this year and will bolster overseas real-estate purchases on the part of the Chinese.

"With QDII2 in mind, within five years we might look back and think of the current levels of Chinese cross-border investment as quaint," Andrew Taylor, co-CEO of Juwai.com, a website that helps Chinese to buy properties abroad, said to The Wall Street Journal in July.

Bringing more transparency to commercial real estate investing

Posted: 27 Aug 2015 06:36 AM PDT

Transparency. Accountability. Accessibility. These are all traits commercial real estate investors want, and they are qualities the best sponsors consistently display.

When investors and sponsors don't see eye-to-eye on these crucial elements, it can lead to trouble. That lesson has come front-and-center here in North Carolina.

Pittenger Land Investments, the land investment firm founded by U.S. Congressman Robert Pittenger (R-N.C.), recently was the subject of a Charlotte Observer article that questioned whether his family's company properly disclosed markups on land it purchased and then sold to investors who hoped to eventually flip the assets to developers. Some investors told the paper they didn't know Pittenger sold them stakes at marked-up prices. The FBI is reportedly investigating the firm, though there have been no official allegations of any wrongdoing.

Pittenger Land Investments told the newspaper it has always fully complied with all rules and regulations. It also appears the firm disclosed the necessary information in documents sent to investors.

Why then are some investors still unhappy? I believe technology has changed our expectations. Investors now demand more information, with more context and at a faster pace than ever before. Conducting investor relations the same way it has always been done is no longer enough.

Granted, dust-ups such as the Pittenger dispute boil down to how much information was disclosed properly and how much relevant information was not shared. In Pittenger's defense, many investors only hear (or read) what they want to hear. However, the debate serves as an important reminder that exceeding expectations with investor communications is paramount.

At our portfolio company Investor Management Services, we're seeing more and more how important this issue can be. Our clients have told us the most valuable items we can provide are the tools to attract, engage and manage their investors in the 21st century.

Years ago, receiving a paper credit card statement in the mail was an appropriate and acceptable method of staying up-to-date on account balances. Keeping an investment prospectus in a filing cabinet for future reference was standard practice.

Today, any card issuer that only communicates with paper mailings won't stand a chance in the marketplace. Very few people believe paper filings in a storage room are the best way to access investment records.

Customers now expect and demand real-time updates on their mobile phones. Transactions are documented instantaneously. Legal disclosures and investment details should be available from almost anywhere with a user name and password.

For commercial real estate professionals, this is a game changer, and frankly, we have been slow to adapt. Too often, paper statements with arcane language are mailed to investors with little other communication. That doesn't cut it anymore. Investors want their real estate holdings and relationships to be as accessible and transparent as their online banking and brokerage accounts. They want all the available information at their fingertips, not just the required minimum mailed periodically in a legal document.

This shift is driving growth at our company. We have added new clients weekly, even in the traditionally slow summer months, and we're investing in technology updates to deliver the tools sponsors need to provide a top-shelf experience for their investors.

IMS clients are sharing documents and disclosures with online investor portals, granting their investors access anytime and anywhere. Investors are monitoring investment dashboards to track performance. All parties can process transactions with the click of a mouse or the tap of a touchscreen.

In the modern economy, "We didn't know," is no longer a good excuse. The tools to manage investor-sponsor relationships are delivering transparency, accountability and accessibility we all should enjoy.

By Robert J. Finlay | Chief Executive Officer | QuietStream Financial

Get $1,000 of Monthly Rental Income From RioCan Real Estate ...

Posted: 01 Sep 2015 05:00 AM PDT

Furthermore, by buying REITs you diversify your portfolio immediately because REITs typically own and operate hundreds of properties.

Since its inception in 1993, RioCan Real Estate Investment Trust (TSX:REI.UN) has become an industry-leading retail REIT. RioCan is Canada's biggest REIT with an enterprise value of roughly $16 billion at the end of June 2015. The REIT has ownership interests in a portfolio of 353 retail properties, including 15 under development.

It has approximately 7,600 loyal tenants. About 84% of RioCan's revenue is generated in Canada, while 16% comes from the United States. Of the 84% revenue from Canada, close to 43% comes from Toronto, and almost 11% comes from Ottawa. Of the 16% that comes from the U.S., 55% comes from the state of Texas.

The REIT's revenue source is diversified by tenant, with none generating more than 4.1% of revenue. Its top tenants include recognizable names such as Shoppers Drug Mart, Loblaw Companies Limited, Wal-Mart Stores, Inc., and Canadian Tire Corporation Limited.

Since 1996, the REIT has maintained an occupancy rate of 95% or higher. Further, its lease expiry dates are spread out. In addition, RioCan hasn't cut its distribution for at least 18 years, and it has occasionally increased it. Its 5.7% yield is pretty solid with a payout ratio around 85%.

How to receive $1,000 in monthly income

Buying 8,511 units of Canadian REIT at about $24.70 per unit would cost a total of $210,222, and you'd receive $1,000 per month, a yield of just over 5.7%.

Investment	Annual Income
$210,222	$12,000
$105,111	$6,000
$21,023	$1,200

Most of us probably don't have that kind of cash lying around. No problem. You could buy 4,256 units at $24.70, costing a total of $105,111, and you'd receive $500 per month, and still get a 5.7% income from your investment.

Okay, $105,111 is still too much. Instead, you could buy 852 units at $24.70 per unit, costing $21,023, and you'd receive $100 per month.

See what I'm getting at? You'd receive that 5.7% annual income no matter how much you invest. And the investment amount is up to you.

Tax on the income

REITs pay out distributions that are unlike dividends. Distributions can consist of other income, capital gains, foreign non-business income, and return of capital. Other income and foreign non-business income are taxed at your marginal tax rate, while capital gains are taxed at half your marginal tax rate.

So, to avoid any headaches when reporting taxes, buy and hold REIT units in a TFSA or an RRSP. However, the return of capital portion of the distribution is tax deferred. So, it may be worth the hassle to buy REITs with a high return of capital in a non-registered account.

Of course, each investor will need to look at their own situation. For instance, if you have room in your TFSA, it doesn't make sense to hold investments in a non-registered account to be exposed to taxation.

In conclusion

RioCan REIT offers a diversified yield of 5.7% from a portfolio of retail properties in Canada and the United States. The REIT pays a monthly income, so you can do whatever you want with it. If you don't need the income right now, you could reinvest the distributions at a 3% discount from the market price.

Want more top dividend stocks?

These three top stocks have delivered dividends for shareholders for decades (and even centuries!). Check out our special FREE report: . Click here now to get the full story!

Fool contributor Kay Ng has no position in any stocks mentioned.

Some investors buy properties and rent them out to receive rental income. Those properties require a huge amount of capital up front. By investing in real estate investment trusts (REITs) instead, investors can invest a small amount and still receive a juicy monthly income. Additionally, a professional management team takes care of the properties and the tenants, so you don't have to.Furthermore, by buying REITs you diversify your portfolio immediately because REITs typically own and operate hundreds of properties.Since its inception in 1993, RioCan Real Estate Investment Trust (TSX:REI.UN) has become an industry-leading retail REIT. RioCan is Canada's biggest…

Real Estate Investing

Thursday, 3 September 2015

Chinese Real Estate | Chinese Investors NYC - The Real Deal | Real Estate Investing

Chinese <b>Real Estate</b> | Chinese <b>Investors</b> NYC - The Real Deal | Real Estate Investing

By Robert J. Finlay | Chief Executive Officer | QuietStream Financial

No comments:

Post a Comment