Case Study: Structure Finite Paper Company

The framework can define as how the work or system is running in order to achieve the objective. The company was act as trustee on behalf of investor. The company will do the investment in the property or real estate sector for example building, houses, and mall. Company will buy or lease the properties for purpose of retaining the retail income. The company can increased their rental income by upgrade, renovate or replace the property. The company will responsible for all the damage, management fee or any expenses regarding to the properties that use as the REITs properties. The investor or unit holder will gather the pool of money to the company. The unit holder is expected the dividend as the return for their investment. The company will

$22million) KRW25 billion (U.S. $22million) KRW10 billion (U.S.$9million)

Offering Public/Private Public (at least 30% of capital)

Shareholder restrictions None None Maximum 30% single investment holding

Investment restrictions At least 70% of total assets in Corporate restructuring assets At least 70% of total assets in real estate Property developments Maximum 30% of total assets Maximum 30% of net equity Maximum 30% of total assets

Dividend distribution At least 90% of earnings

Acquisition & registration tax 100% exemption 50% exemption Acquisition tax: 1.1%,

Registration tax: 1.2%

Corporate income tax Exempt if 90% of distributable income is paid out as dividend

Sources: (Pham, 2011)

2.5 Type of REITs

The REITs can be generally classified into three types REITs which is equity, mortgage and hybrid. Firstly, equity REITs is normally has direct ownership of property. The physical properties that normally invest by the equity REITs are specific. For example healthcare, hotel, storage, office, retail, industrial and residential. This type of REITs is get the income from the collection of the rental and receive capital gain when it sales any of properties that its own. This is based on the increased in the valuation of

REITs are listed in secondary market and due to this reasons it was easily to convert to the cash. The secondary market in South Korea is KOSPI index that represent the stock market index. This will give the convenience to the unit holder to tread between buyer and seller.

Next, the advantages of REITs are affordability. The REITs is affordable for all the type of investor whether individual or companies. It only required small capital outlay to invest in this type of investment.

Lastly, REITs is providing the professional management for every property that the company manage. The fund that pool to the trusted company is managed by the expertise in their area. The money will be manage by manager that already expert in the REITs investments. The manager already had the experience in managing the real estate properties in order to gain higher income.

The Incentive that gives by the government is give the advantage to the investor to invest in REITs. The main purpose of the incentive is for encourage REITs in the market (Yue, 2006). The implementation of the incentive shows the concern REITs important in the real estate market. Nevertheless, the fastest growth of REIT in Asian was give benefit from government incentives obligatory through REIT legislations (Yue,