Direct Property Investment vs REIT

cremeegg

Registered User
Messages
4,156
As someone who often posts about the positives of investing directly in property I am equally often told that the same potential upside is available with less risk ( or the same risk spread across multiple properties) and less effort.

I came across this

https://www.irishtimes.com/business...ish-ipo-is-this-an-inflection-point-1.3421367

in todays paper.

The promoters had loaned money to the REIT at 14%.

The management team had a bonus plan that would entitle them to 15 per cent of shareholder returns above an initial threshold of 10 per cent total returns a year – rising to 20 per cent of returns in excess of a 15 per cent annual “hurdle”.

Anyone buying shares in this is a fool. And how often do IPOs contain items like this that small private investors are not equipped to discover. There isn't always a competent reporter available to uncover them. And even here the IPO was pulled, I wonder would the IT have been so critical if the thing was going ahead.
 
I had heard that management teams for some REITs are really creaming it, but that is really brazen. I can't imagine that all REITs are that bad...at least i hope they are not!

About REITs vs investment properties, most people don't have access to owning property outright but want it as part of there portfolio.

To be honest a bad investment/investor could be do even worse if they bought a house/apartment with debt any they didn't know what they were doing.
 
Anyone reading that prospectus and still considering buying at the IPO needs their head read. Then again, how many people actually bother reading the prospectus? The fact that this REIT is extracting the urine on an industrial scale doesn't mean that REITs should automatically be ignored. It just means that you need to read the conditions carefully.
 
Back
Top