In this lecture, you'll be introduced to what exactly a read is the important people behind the scenes and the other basic concepts. Knowing all these will help strengthen your foundational knowledge on return investment. So without further ado, let's start. If you are new to Reed, Reed stands for real estate investment trust, they are basically a fund that owns a portfolio of properties that are rented out to tenants. The tenants in turn pay rental fees, which are then collected and subsequently distributed to investors like yourself. reads allow you to own various types of properties, which were previously inaccessible to the everyday investor.

Next, let's talk about the sponsor, which is this neon purple circle over here. You will come to realize that many reads will have a sponsor related to each them Just like how parents nurture their child, a sponsor is an entity that basically provides a central support such as its vast experience, contacts and credit backing to the betterment of the reach. This was evident back in 2008 2009. During the Great Recession, many reads were able to time through those difficult times with the help of their sponsor, who were supporting them source for needed capital. A sponsor may also be the largest shareholder of the read, since they were the one that injected their own properties into the initial portfolio of the next, the manager the red circle over here. The read manager title refers to a team of business comm financial savvy people who are in charge of optimizing the reads capital structure and identifying assets that can be acquired or sold.

They're also in charge of planning initiatives that would enhance the value of With the properties the other manager is called the property manager, the cool turquoise circle over here. This team of people provides on the ground services such as collecting rental payments from tenants, implementing marketing programs, ensuring that floors are swept clean and leaking pipes fixed and so on. For the sake of simplicity, I will lump both the root and property manager together and call them simply as the manager. So later on in the course, whenever I use the term manager, think of both these parties and the important roles that they play. Next, we have the trustee, which is the deep blue circle. This group of people oversees the activities of the manager and make sure the manager complies with the trust deed and regulatory requirements as well as higher replacements if the shareholders so wishes to replace a certain person Within the managers team, the trustee is also paid a fee to perform their function of providing oversight.

Here is a simplified overview of the parties involved in a read. This will give you an eagle eyes perspective, what a read is and the roles different parties play. Great. Now let's turn our attention to the other basic concepts of read investing. The first point, there are two main board classes of REITs equity reads and mortgage REITs. Equity reads own a wide range of property types, including offices, shopping centers, and much more.

They derive most of the revenue from rental income mortgage rates on the other hand, finances both residential and commercial properties, and this type of reads earns most of the revenue from interest. is earned on their investments in mortgages backed securities. Note that in this read course, we will only talk about the publicly traded equity reads. Second point reads in the US are legally required to pay out at least 90% of their income to unit holders annually. In addition, at least 75% of the reads income must be earned from rental income and its assets must consist at least 75% of real estate. All these rules are to ensure that the reader do not deviate from their investment mandate.

Note that different countries have their own rulings for reads, but the difference is minimal. Most reads follow a similar ruling as the US The third point similarly to stocks reads can be easily bought and sold and are traded through your online stockbrokers. The fourth point Just to make things simple in this course, unit holders and shareholders are one in the same as with units and shares. The fifth point read investors will often come across this term called right of first refusal. And what this term is, is basically an agreement established between the reader and its sponsor. When the sponsor wants to sell its property asset away, the reader will be offered the right to purchase the asset first, before it is offered to the market.

What many read investors do not know is that the sponsor has the obligation to ensure that the rental income of the properties is stable before injecting them into the route. And the final points. The common ratios used for analyzing reads include whale occupancy rates, nav, gearing, and dpu. I have a classified these ratios according to their use and summarize their functions, so do take some time to read and understand them. This table of ratios is included in the summary notes. Just download them at your own convenience.

One last thing throughout the remaining lectures if you happen to come upon a term or concept that is unfamiliar to you, pause the video and head to investopedia.com search for a proper explanation of the term used. Or simply leave me a message in the q&a section. I will try to answer your queries as soon as I can. Thanks for your attention.