Frequently asked questions
A REIT is a corporation that combines capital from many investors to buy and operate income-producing real estate. It gives investors a low cost opportunity to include commercial real estate in an investment portfolio. Also, REITs avoid the “double taxation” treatment of income that would result from an investment in a corporation, because REITs do not pay taxes if certain standards are met, including the distribution of at least 90% of income that would otherwise be taxable. Hence, REITs are focused on generating and distributing income in the form of dividends to their shareholders.
Investors who want to (1) generate current income as well as opportunities for longer-term value growth, and (2) diversify an investment portfolio, will find REITs an attractive supplement to an existing investment strategy. Investors should be mindful that there is no guarantee that the targeted return or distribution rate will be achieved. You should carefully review the offering documents, including the prospectus, prior to making an investment.
A-List Group Holdings was founded by Luqmaan Samie to make direct real estate investment easy and affordable for the smaller investor. Other REITs that, like A-List Group Holdings REIT, are not listed on stock exchanges (so-called “non-traded” REITs), often raise investor capital through a commission-based distribution system that involves paid intermediaries such as broker-dealers and financial planners. The total commission and fee structure related to raising investor capital via this distribution channel is typically 10%-20% of the overall offering proceeds. In other words, approximately 10%-20% of the cost of the REIT shares is spent on commissions and related fees in these other non-traded REITs. A-List Group Holdings does not pay commissions. Our method of distribution is the internet and our web site. Our goal is to attract qualified potential investors to A-List Group Holdings utilizing print and on-line advertising, newspaper and magazine articles, blogs, and search engine optimization. We believe that with the ease of access to the internet and the transparency of the internet, A-List Group Holdings can deliver a real estate product to the market that has 10%-20% more of the investment amount actually being invested in real estate rather than being paid to others in the form of commissions. This is the primary way that we are unique and different.
Shares in A-List Group Holdings REIT may be purchased by anyone who is not a resident of the South Africa, subject to local laws.
97% of the gross proceeds from the sale of shares will be used for investment. The remaining 3% of the gross proceeds will pay for organization and offering costs. Before investing you should carefully review the prospectus for a full discussion of fees and costs that will be charged.
History has shown that traded REIT valuations (represented by share price) are variable, with such share prices sometimes being higheror lower than “Net Asset Value” (the calculation of (1) the current between traded REIT share prices and NAV. Non-traded REITs such as A-List Group Holdings REIT do not have this issue. Additionally, annual dividends for traded equity REITs have averaged below 4% over the past three years (source: NAREIT.com ).
Distributions are scheduled on a quartely basis. The amount of each distribution is determined by our board of directors and will depend upon cash availability as well as current and projected cash requirements. Remember though, in order to remain qualified as a REIT, we must make distributions of at least 90% of our annual REIT taxable income. The payment of any distributions, and that profits will be obtained from your investment, are not guaranteed.
We will calculate our monthly distributions based upon the week an investor purchases shares in A-List Group Holdings. Therefore, investors will receive a pro-rated distribution at the end of the first partial Quater during which they acquired shares. The payment of any distributions, and that profits will be obtained from your investment, are not guaranteed.
Yes its possible to sell shares however, A-List Group Holdings will have first option to do repurchasing of shares.
Generally, distributions that you receive will be taxed as ordinary income. We expect that some portion of your distributions may not be subject to tax in the year received due to the fact that depreciation expenses reduce taxable income. This defers a portion of your tax until your investment is sold or liquidated, at which time under current tax laws you will be taxed at capital gains rates.
A-List Group Holdings will provide you with monthly and quarterly updates on the performance of A-List Group Holdings REIT. Additionally, your tax form information will be mailed on or around February 31 of each year.
A PPM is a legal document that discusses the investment program for which money is solicited. A PPM typically includes sections that describe how the solicited money is to be invested, the investment’s business plan, risks associated with the investment, the background and track record of the sponsors, the legal rights and responsibilities of the investors, and more.
A “cap rate”, or capitalization rate, is the expected first year return on an “all-cash” real estate acquisition. For example, if you purchase a property, whose rent less expenses during the first year of ownership is forecasted to be $80,000, for $1,000,000, then your cap rate is 8% ($80,000 divided by $1,000,000 equals 8%). If you were able to purchase the same property for a lower price, say $800,000, then your cap rate would be 10% ($80,000 divided by $800,000 equals 10%). Thus, cap rate and purchase price have an inverse relationship – the higher the cap rate, the lower the price.
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