Through the Portfolio App, you can get exposure to the property market via The Property Hub REIT Plc.

But what is a REIT? How can you make money from it? How is it different from owning property directly? We will explain!

What is a REIT?

A Real Estate Investment Trust (“REIT”) is a company that owns income-producing property. REITs are listed on a stock exchange, allowing investors to pool their money to invest in property assets by buying shares in the company. 

You can think of it as a wrapper around a property portfolio, which allows (potentially) thousands of people to share in the ownership of the properties inside.

Here’s how REITs work from your perspective as an investor:

1

You buy shares in the REIT, and get exposure to every property it holds.

2

The properties within the REIT are rented out and generate rental income.

3

You receive your share of the rental profit (after all costs) as dividends.

4

If the properties increase in value, you will benefit from capital growth. 

This is reflected in the value of your shares.

REITs are an institutional-grade structure that originated in the USA, where they collectively own $3.5 trillion of property assets (including the Empire State Building!).

In the UK, many well-known property companies are structured as REITs – including British Land and Land Securities. REITs in the UK have a market capitalisation of over £50bn.

How can you profit from owning shares in The Property Hub REIT?

The total return on your investment will be made up of the dividends you receive plus any change in the value of your shares.

This gives you a similar type of exposure to property as if you owned a buy-to-let property directly, although there are different risks and factors to be aware of when investing in a REIT and you should read the Prospectus and Key Information Document in full.

Dividends

Owning shares means that you are entitled to a share of the rental profits produced by the properties the REIT holds. You receive your share of the rental profits (after all costs) as dividends.

The ability of the Company to pay dividends is not guaranteed. Capital growth is not guaranteed, the value of property can go down as well as up. Property Hub does not give advice. Capital at risk.

Share value

An increase in the value of shares is mainly dependent on the value of the REIT’s property holdings. This will be determined by conditions in the UK property market in general, and the performance of the REIT’s property holdings in particular. The value of the REIT’s holdings is represented by something called the Net Asset Value, or NAV – and the NAV determines the share price.

If the value of the properties rises this increases the NAV, which in turn increases the share price.

If the value of properties decreases this decreases the NAV, which in turn decreases the share price.

Capital growth is not guaranteed, the value of property can go down as well as up and the value of your investment may fluctuate. Your capital is at risk.

How is owning shares in The Property Hub REIT different from owning property directly?

Owning shares in a REIT is a “hands-off” form of property investment. You are handing over responsibility to someone else to make the investment decisions on your behalf.

This means you don’t have the same level of control or involvement as you would have when buying property yourself, but it does have various advantages too.

REIT

Buy-to-let

Diversification

More – your investment is spread across a larger number of properties which potentially reduces concentration risk.

Less – your investment is more likely to be in one property or a small number of properties which concentrates risk.

Time input

None – the REIT arranges the management of the properties.

Some to lots! e.g. dealing with tenant issues or repairs.

Level of control

None – the REIT and its advisers make all the property decisions.

High – as a direct owner, you can make all the decisions.

Unexpected costs

None – you will not be asked to contribute to property costs.

Some – e.g. repairs and property maintenance.

There are also specific risks you should understand when it comes to investing in a REIT. You must read the risk factors contained in the Prospectus before investing. Your capital is at risk.

We believe that just because you want to be hands-off doesn’t mean you should have to settle for a boring investment experience! That’s why we built the Portfolio App, which helps you get to know the properties owned by the REIT and keeps you updated.

Our aim is for you to feel every bit as involved as if you fully owned all the properties yourself – just without the calls about broken boilers!

How do you buy and sell shares in The Property Hub REIT?

You can buy and sell shares through the Portfolio App.

If you are an eligible investor and you have decided to invest after reading the Prospectus, you can use the App to make a deposit using a debit card or by linking a bank account and placing a request to buy shares. At this point you’ll be able to take virtual tours of every property the REIT owns, and start receiving exciting news updates.

To sell your shares, place a request to sell, once the shares are sold the funds will be paid into your bank account.

Your request will be successful as long as another investor (or the REIT itself) is willing to buy your shares from you. If no buyer can be found, your request will be rolled over until the next month.

You should consider buying shares as a medium to long-term investment. You may not be able to sell your shares either within the timescale or at the price you require. The value of your investment may go down and you may not get back all that you invest.

It is important to know that all requests to sell are considered on a single day each month, so depending  on when you place your request it could take a few weeks until it is processed.

Common questions

You can see the key details of the REIT’s holdings, along with some of the investment highlights on this page. When you buy shares in the REIT via the Portfolio App, you can see full details of everything the REIT owns – including video tours, photos, financial information and regular updates.

The total return on your investment will consist of the dividends you receive plus any increase in the value of your shares. 

The REIT’s target is to deliver an annual dividend of 3p for every £1 invested. Dividends are dependent on distributable profits – being income less costs and fees (as set out in the Prospectus). However, this is dependent on the REIT achieving its objective and is not guaranteed. The dividend policy is described more fully on page 41 of the Prospectus. 

 

The Board of Directors will determine the amount and date of the first dividend based on their assessment of the Company’s ability to service the cost. This evaluation will be based on a number of factors, including the growth of the funds under management, the successful acquisition of income producing assets and maintaining a prudent level of working capital and liquidity. It may take at least two years from Admission before dividends at the target levels are achieved.

 

An increase in the value of shares is dependent mainly on the value of the REIT’s property holdings. This will be determined by conditions in the UK property market in general, and the performance of the REIT’s property holdings in particular. 

Yes – the REIT currently uses leverage, and is permitted to borrow up to 60% of its properties’ value. This means you get exposure to the benefits of leverage, without needing to arrange mortgages yourself.

Further detail about the REIT’s investment policy in relation to leverage can be found on page 38 of the Prospectus.

Management is outsourced to specialist third party agencies, who are accountable to the board of the REIT.

Shareholders like you! The role of Property Hub Advisors Ltd is to offer investment advice to the REIT. The REIT has a board of directors (who are completely separate from Property Hub) to look after shareholders’ interests and ensure the investment policy is followed.

No – you can only buy and sell shares in The Property Hub REIT through the Portfolio App.