Asia Investment Management Inc.("A.I.M.")
Asia Investment Management Inc.
Trusted Value Creator

Corporate Financial Management through REITs

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REITs are treated as corporations under the commercial law but are also entitled to various tax benefits under the Real Estate Investment Company Act. Therefore, REITs can be utilized by mid-to-large businesses very effectively as financial management tools.

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A.I.M. has been providing the optimal financial services for real estate trades of businesses that wish to use REITs for their financials. The examples include, but are not limited to, large commercial real estate purchases and the first industrial REITs management (of Ssangyong Cement Industrial Co., Ltd).

 

 

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Liquidation of Real Estate Assets to Improve Cash Flows

 

• When businesses need to attain positive cash flows for strategic purposes, they can sell off real estate assets to REITs in order to improve cash flows and financial structures (e.g. lowering debt ratios) at the same time. Cash inflows from such transactions can contribute to produce greater corporate value and be invested in future-oriented areas instead.

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• Financing by strategic liquidation of real estate assets through REITs provides many benefits compared to traditional debt financing (bank loans, bill/bond issuance, etc.). Real estate liquidations do not increase the debt ratios and pose no burdens for debt repayments. 

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• While selling assets to the market produces large amount of cash inflows, doing so forces the seller to completely forfeit the assets’ future values. Liquidation through REITs compensates, in part, such opportunity costs.

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A.I.M. uses REITs to provide businesses these options to utilize real estate assets for financial purposes.

 

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REITs Usage in Real Estate Property Acquisitions

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• Businesses often need to acquire large real estate assets or utilize large commercial real estate properties for many different reasons. Businesses can financially benefit from using REITs in these acquisitions or utilizations.

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• A.I.M. provides financial services through REITs (financial supports or joint investments through REITs) to mid-to-large businesses making purchases for their own offices or making strategic real estate purchases. Unlike direct purchases of real estate properties, strategic acquisitions through REITs not only provide tax benefits, but also allow adjustments for amount of cash investments depending on the current state. In addition, if companies have set up duration of the strategic usage, they can determine the real estate usage period accordingly.

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Businesses that wish to use REITs to acquire or utilize real estate properties must have the minimum credit ratings of A.