Immobilien AG: activities, stock exchange, conditions & advantages

A real estate stock corporation – or real estate AG for short – is a real estate company that has the legal form of a regular stock corporation (AG) and whose core business is primarily focused on the real estate sector. The company’s assets are thus used primarily – or exclusively – for real estate investments, or they consist of the construction of real estate and the subsequent sale of the same.

The largest German listed companies for residential real estate (as of 31.12.2o19):

• Vonovia
• German Housing
• LEG
• DAY
• Grand City Properties
• Adler Real Estate
• GAG

Business Activities Real Estate AG – Construction, Trading, Management & Co.

The range of activities of real estate stock corporations focuses, for example, on project development and the construction of real estate. The management and sale of real estate are also not uncommon focal points of this type of company. All in all, public limited companies can be involved in real estate trading, the brokerage of real estate as well as the holding and management of their own portfolios or offer corresponding services for non-corporate investment portfolios. Real estate stock corporations are a particularly popular choice for leasing.

Possible activities at a glance:

• Project development
  • Building
• Real Estate Trading
  • Acquisition
  • Distribution
• Real estate management
  • Hold
  • Farm
  • Rent
• Third-party services
  • Brokerage of real estate not owned by the company

Real estate company on the stock exchange – legal requirements & advantages

Real estate stock corporations can choose whether or not they want to be listed on the stock exchange. If you are a shareholder of a real estate stock corporation and decide to list your company on the stock exchange, you are subject to the German Real Estate Investment Trust Act (REIT Act). The REIT Act specifies which general regulations apply to your company and which qualifications your company must have in order to be admitted as a REIT stock corporation, as well as which tax regulations must be taken into account.

Many family businesses wishing to operate in the real estate sector as a public limited company (AG) deliberately decide against such a stock exchange listing, as the shareholders of their company are to be restricted to their own family circle of contacts and no share trading in public is envisaged.

Exchange-traded real estate stock corporation / REIT-AG

The REIT corporation is originally based on a US corporate form, namely the “Real Estate Investment Trust” – REIT for short – which gave the listed real estate corporation its name. Since its beginnings, the trust has experienced a considerable upswing. Little known in 1960, the corporate legal form slowly but steadily conquered the world in the 1990s and gained international renown. With the enactment of the REIT Act in 2007, the legal form of the REIT-AG was also introduced in Germany.

To make it easier to distinguish between them, German REITs are also often referred to as G-REITs, with the “G” standing for “Germany”. Sometimes REITs are also incorrectly translated as real estate funds in this country – however, there are some legal and economic peculiarities compared to the German legal form of the real estate fund.

Legal requirements according to REITG – stock exchange listing, quota & Co

In order for real estate stock corporations to be recognized as REIT corporations and to enjoy the corresponding advantages and benefits, they must meet a number of requirements defined in the German Real Estate Stock Corporations with Listed Shares Act (REITG). One of these rules requires that the real estate stock corporation be mandatorily listed on the stock exchange. Other restrictions relate to the company’s permitted free float – i.e. all company shares distributed among several, smaller investors – as well as the participation by shareholders together with per capita distribution of the shares. Other conditions regulate the equity capital, the fixed assets and also the turnover generated by the management of real estate.

Legal requirements for a REIT-AG:

• Headquarters & Management within Germany
• Listing on the market obligatory
• Free float at the time of listing: at least 25%.
• Free float after listing: at least 15%.
• Equity ratio: at least 45
• Real estate investments (immovable assets): at least 75%.
• Income from real estate: at least 75
• REIT participation per shareholder: max. 10%.
• Distribution ratio (net profit): at least 90%.

Small tip: For real estate stock corporations shortly before listing, a time window of two years is granted in order to fulfil all necessary requirements. Until all requirements under the REITG have been fulfilled, such a company is considered a pre-REIT.

Advantages for REIT stock corporations – tax exemption, competitive advantage & Co.

Real estate stock corporations with a stock exchange listing are particularly popular for financiers and large investors, as they are exempt from both corporation tax and trade tax, provided they meet the legal requirements in accordance with the REITG. As real estate is a particularly safe investment opportunity, it offers the chance to cushion inflationary fluctuations and risks. Furthermore, the purchase and sale of shares is simple thanks to market access, and transfers of ownership can be carried out quickly and flexibly.

Access to the capital market enables a real estate stock corporation to skilfully generate equity capital, which can then finance the investment in real estate. As a result, real estate stock corporations have a clear advantage in terms of the speed of growth of their equity, which means greater competitiveness in the market as a whole. Other legal forms of companies, on the other hand, are dependent on retaining their profits – that is, leaving the profits in the company instead of distributing them and accumulating them there – in order to increase their company’s equity capital or have no legal claim to a distribution of profits. The legal form also offers a considerable degree of security, as the equity capital accounts for just under half of the stock corporation’s total capital.

Advantages for listed real estate companies:

• No corporate income tax
• No trade tax
• Secure investment through tangible assets (real estate)
• Chance to offset inflation
• Quick & easy purchase/sale of shares
• Flexible share transfer
• Simple equity procurement
• Competitive advantage due to high growth rate
• High security due to equity ratio

Advantages for investors – Stable cash flow, growth & 90 % dividend

Another plus: the REIT corporation also offers a lucrative business for investors. Public limited companies are generally established for the long term, which means that the company can offer investors the prospect of a stable cash flow and long-term growth without exposing them to increased risk. The dividend payout is also very attractive for shareholders, with a statutory minimum requirement of 90 percent of the net profit for the year under commercial law.

Advantages for real estate AG investors:

• Stable cash flow
• Long-term corporate growth
• Low risk
• Attractive dividend payout

However, the application of the half-income method is not possible for shareholders with regard to the distribution of profits. Their profits must be fully taxed.

Real estate stock corporation / REIT-AG – For whom is it worthwhile?

Are you thinking about founding a real estate company or investing in an existing real estate company? For construction companies and development companies, this is often a lucrative venture, but also as a financier or shareholder of a real estate holding company, the formation of a real estate corporation can be quite worthwhile. Furthermore, the economic occurrence of real estate stock corporations extends to housing associations, property management companies and large brokerage firms.

Ownership of the real estate portfolio may be held either by the real estate company itself as a direct investment or by another real estate company whose shares are acquired by the real estate company by means of a participation. A mixture of direct investments and third-party investments is often used to acquire, hold or sell real estate. Due to the wide range of residential and commercial properties, the stock exchange listing is an attractive model for real estate companies.

AG: foundation, legal form, real estate shares (list)

1. Stock corporation (AG)
2. Real estate shares: List of companies
3. Real estate company
4. Alternatives to the REIT: Legal forms in Germany

Stock corporation (AG): Formation, liability, legal form & Co.

Aktiengesellschaft (AG) – The stock corporation is a German legal form founded by at least one person and organized by different bodies. Instead of a managing director, the company is managed by a board of directors consisting of at least one person. As the name already indicates, this legal form of a company primarily stands for stock trading. You would like to start a company alone or together with other people and learn more about company law forms in advance? Then you’ve come to the right place!

• Stock corporation (AG)

Real estate shares: List of companies

Real Estate Shares – Not everyone can afford real estate as a capital investment. Through real estate shares, however, everyone can participate in the real estate market and invest money. The share prices of the big players are rising year after year. Vonovia, Deutsche Wohnen, Dream Global, CBRE and Patrizia are a few of the best known active companies in Germany. In addition, there are more than 25 other companies. We have an overview of the most popular real estate stocks for you as an investor. But first a look at the risks of a stock, the stock market, for beginners and beginners. Now to the list and more on the real estate market, your investment options and all prices at a glance, here in the article on real estate stocks.

• Real Estate Stocks

Real Estate GmbH & Asset Management GmbH

Alternative – In this article you will learn the basics about real estate companies. Briefly explained, a real estate company is a company that has the purpose of leasing, developing, financing, realizing and/or marketing. It doesn’t matter if it is one or more properties. The management of residential and commercial real estate – in its own interest or as a service offered to third parties – is also a popular focus for real estate companies and asset management GmbHs. Find out more about the main advantages and disadvantages of buying real estate and the expected costs.

• Real estate company

Alternatives to the REIT: Legal forms in Germany

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• GmbH: Limited liability company
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

Experiences and mistakes in trading – Preface

Important: I am not a financial trader, have no education in this field. I am an entrepreneur and invest part of the profits in financial products. Therefore, the article is for beginners, beginners, beginners: financial trading simply explained.

Here I collect only simple, basic experience for you.

That was expensive! First stock purchase, Bitcoin & Co.

How did I go about this experience? First, I set up a virtual account, here you can practice with virtual money, test and gain experience. Then I wanted to look at all the apps, in 48 hours, so to speak, the extreme comparison as an entrepreneur. In the process, I lost money. 1,500 euros on the first day, 3,200 euros on the second day. But, I also gained a lot of experience.

I’ve been active now since the beginning of 2019 and here are a few of the tips for you that you should definitely look at before you buy your first stock, your first bitcoin, your first ETF product, etc.

These tips will save you money, time, and most importantly, nerves!

Especially in the beginning, I so often sat cursing in front of the notebook, cursing in front of the app, depressed in front of the screen – it has to be done! If financial products were so simple, anyone could do it.

Trading: Stocks, currencies and apps

If you want to read more tips, in the blog you can find many more articles, like:

• Learn Currency Trading -Experience, Tax & Example
• Cryptocurrency & Block Chain – Simply Explained
• Buy Stocks: Direct Bank / House Bank

Trade only with play money

Certainly the A&O: risk awareness. So that your risk is as low as possible, always trade only with money that you “do not need”. No matter if currency, stock, ETF, for 99.99% of the investors it is not about ultra-short-term profits every hour, but about short-term to long-term, strategic investments.

If you have an initial, small fortune that you can invest, there are many, many avenues open to you. We focus in this article and others primarily on explaining:

• Share: Company
• ETF / Index: industry
• Currency / Forex: Economic regions
• Cryptocurrency: digital currency

Everything is subject to the principle:

demand / supply

That is, not only “hard” factors play a role, such as the concrete economic performance in numbers by balance sheet, psychology also plays a big role.

Example: car manufacturer closes plants 3 weeks

I had just invested a 5-digit amount in Tesla. Just before the Christmas season.

Overnight, an email went out to all company employees that the plants would be closed for 3 more weeks after the regular break. In the morning the share price was still stable, I hadn’t paid attention to the news yet.

2 hours later the price dropped and dropped and dropped. News (news) is an extremely important factor in stock trading. Accordingly:

Respect the risk

Price action: -10% in the morning

Always invest your money “for the long term”, mentally. If you panic now and sell, you immediately make minus. So trading also involves “confidence” and as I said, a lot of psychology. In the end, “the market” is just many, many people making decisions. Even the algorithms in high-speed trading are written by people who make decisions.

Here you can see the example of the car industry with price trend.

Of course, like everyone, with every deal I thought, “Great, bought cheap”. After the first jump I was very happy, but then I became disillusioned again and a few days later the price collapses by 10% in the morning.

Think short term now:

“Short term”: oh my god! Crap, -10%

Or are you thinking long-term. Let’s just look at this chart with 5-day in progression. If you look at just this one morning, it looks bad. But look at the entire 5-day progression, starting at round about 630 to currently 645.

“Long term”: buy on perspective

It’s just a small, very simple example, but important for you:

Always buy on perspective, don’t react frantically to short-term movements in the market.

Exchange opening hours

New York Stock Exchange example.

I noticed the fall of a stock too late (time difference). When I wanted to sell, the New York Stock Exchange was already closed. That means I have to wait the whole weekend to get my capital free again. I can’t sell again until Monday morning.

Always remember the opening hours of the exchanges

Opening Hours: New York Stock Exchange / NASDAQ

The New York Stock Exchange is open 5 days a week, Monday through Friday.

• CET (USA): 09:30 am to 4:00 pm
• MET (Europe): 15:30 to 22:00

Stop Lose / Take Profit: Automate

Execute trades on your own? That’s a 24-hour job if you want to trade financial products professionally.

Before we get to “Take Profit on ‘9”, first a look at the method:

Buy cheap, sell expensive

Because you can’t sit in front of the app yourself 24/7 waiting for the perfect time to sell, there are SL (Stop Lots) and TP (Take Profit).

Stop Lots: Minimize Losses

Let’s say you invest in a stock. Since Wirecard, we all know, it can also go down quickly and very clearly, especially for “normal” investment who do not keep a constant eye on the news and insiders.

Stop lots (SL) is a limit to the downside. You can say for example, I have invested 10,000 euros, should this single trade go below 6,000 euros value, sell this position. Likewise it goes upward. Here also immediately still another tip, TP on 9′.

What that means, you’ll learn in a moment.

Take profit: setting to full amount / you -100

Who sets a TP (Take Profit), often goes to the full number, for example 24,000. In doing so, often larger traders descend just before and suddenly, the price goes into the basement and you have to wait again long until the price is at the old level.

I will go into this graphic later. But here you can already see the principle. I have traded here the Bitcoin. Imagine now that you still during the time smaller jumps, between purchase / sale takes. This is not worthwhile at 1,000 euros in trading, but if you invest 100,000 and take 2.4%, you have 2,400 euros profit. If the price falls afterwards and you buy minus the spread a little cheaper, perfect. You will learn more about the spread (profit of the platform) in a moment.

The spread (i.e. profit) for the trader is 200 euros or ~ 1%. Through this shorter-term trade, you would have earned here so ~ 1.4% net profit, after new purchase.

5% wealth accumulation, in one day.

If you do this action on a day 2, 3, you already got 5% asset growth out, in one day.

Early Exit: Sell Before Peak

What does “take profit on ‘9” tell you?

Take Profit means you plan your sale ahead of time. Say you buy for 20,000, plan to sell at 24,000, then set your TP to 24,000, your bank, software, app will then automatically sell when the price reaches the TP of 24,000.

Conversely, this means – keyword “psychology in the stock market”, also crypto & Co. – even if traders have already dealt with the TP, which few actively do, then the following can happen:

You have set a sell point, however, traders go out before you, in the relevant volume, at 23,900, then the price will not reach the 24,000, at least not in the targeted period. The price drops and doesn’t reach the 24,000, so your package doesn’t get sold.

That’s why some trades make it worth my while if you set your setting like this:

• Take Profit (of many traders): 24,000
• Your TP: 23,900

Now comes the advantage, if you are not alone – and you will often notice this effect. The advantage, if the price drops already at 23,900, for example, to 23,100, you can already buy a new package. When jumping to 24,000, you make double profit.

Spread: This is what the trader earns

Often you hear:

“Trade bitcoin or stocks for free”

What is true is that no extra fee is charged. For example, once +10 euros on each trade. But you always pay a spread (spread between buying / selling), from this the platforms live.

Example: spread on cryptocurrency

PS: Spread is the profit that traders take. Example from etoro:

• Bitcoin price: 23,189
• Sell bitcoin: 23,189
• Buy bitcoin: 23.364 (+ 0.9925%)

The spread (i.e. profit) for the trader here is 200 euros each, or ~ 1%.

Through this shorter-term trade, you would have here so ~ 1.4% net profit, after new purchase, earned.

Example: Spread in foreign exchange

In forex trading, for example with the app metatrader, you do not pay ~ 1%, but ~ 0.1%.

What is cryptocurrency, like bitcoin

I don’t want to mention technical terms now, like “block chain”, etc. Simply explained: cryptocurrencies are like commodities, for example gold as a precious metal. There is a finite amount of XY on earth.

Did you know? There are only 21 million Bitcoins

Theoretically, gold is worth nothing, but because people assign value to gold, it has value. The more people use this investment opportunity, the higher the price goes. Bitcoin almost the same way. There is a certain number and the more invest, the higher the price goes. If people sell their shares, so they do not trust the further price growth, the price falls again.

Fast and speculative.

• There is a fixed number of bitcoins
• Higher, faster profits / losses
• Much psychology, little news analysis
• Trading is possible 7-days a week

Higher frequency means more profit / loss

So of course you make “only” 1x profit. If you take the profit “more often”, you can increase the profit within the period.

Method / strategy in trading

You buy at the price low and sell at the next price high

Sounds simple, but many buy a financial product at the beginning and just keep it. This saves you a lot of nerves, short-term trading increases the profit for it.

For example, when I traded my first bitcoins, I sold and bought in between. So I can take small profits and then reinvest when the price is cheaper again. PS: In the hope that it will become cheaper.

My highlight was then the price high of 24,000 shortly before December 24. My last, active trading day. Since then I’m more into social trading, you can learn what that is here: Social Trading.

Slump, Gain: High at $23,900

What a thriller! After trading for a long time, the day now came when I wanted to sell. I ran 2 hours with my app through the city – of course, the sale was already preset, it was more of an emotional being there!

It also went high once again, as you can see in the chart here. The bitcoin rate is shown here in euros. The method is the following: You buy at the price low and sell at the next price high.

An important, important basis in trading financial products. The shorter and more extreme the periods are, the higher the profit, but also the risk of the trade.

• 2 additional purchases in 2 days
• 2 immediate sales

Graph in Euro:

Crypto Trading? A Fulltime Job

I can tell you this: if you don’t want to be intensely and constantly involved with your investments, don’t invest your money in cryptocurrency. But if you do, be there, as seen in the example above, the price does not jump for weeks, but in a few seconds and often several times a day.

Tip. Invest for the long term. There are 21 million Bitcoins, as long as people invest, its value increases. The skeptics of the first Bitcoin years have long been silenced. Buy, hold… hold. In 2, 3 years the price could have doubled again.