FAQ

What is a REIT?

A Real Estate Investment Trust (REIT) is a form of company in the United States established in the 1960’s which allows investors to invest into a diversified portfolio of real estate investments. The portfolio of real estate properties owned by a REIT are often diversified by property type, geography, or multiple categories to potentially achieve the strategic objectives of the REIT. Corporate law and tax law pertaining to REITs provide certain benefits and protection for investors.

Generally, REITs have historically outperformed the broad stock market more often than not when returns are measured in years. REITs have also historically been positively correlated with inflation, which may make them a possible hedge for inflation. There are currently more than 1,100 REITs registered in the United States, and over 200 of them are publicly traded on a major exchange.

How does a company qualify as a REIT?

To qualify as a REIT a company must:

Invest at least 75% of its total assets in real estate
Derive at least 75% of its gross income from rents from real property, interest on mortgages financing real property or from sales of real estate
Pay at least 90% of its taxable income in the form of shareholder dividends each year
Be an entity that is taxable as a corporation
Be managed by a board of directors or trustees
Have a minimum of 100 shareholders
Have no more than 50% of its shares held by five or fewer individuals

How do REITs make profits?

Most REITs profit through one or both of the following business models: (1) leasing space and collecting rent on its real estate, and/or (2) making loans or mortgages backed by real estate. The income generated from rent and/or loan interest is then paid out to shareholders in the form of dividends. REITs must pay out at least 90% of their taxable income to shareholders, and most pay out close to 100%. In turn, shareholders pay the income taxes on those dividends.

Why invest in REITs?

REITs historically have delivered competitive total returns, based on high, steady dividend income and long-term capital appreciation. Their comparatively low correlation with other assets also makes them an excellent portfolio diversifier that can help reduce overall portfolio risk and increase returns. These are the characteristics of REIT-based real estate investment.

How have REITs performed in the past?

REITs' track record of reliable and growing dividends, combined with long-term capital appreciation through stock price increases, has provided investors with attractive total return performance for most periods over the past 45 years compared to the broader stock market as well as bonds and other assets.

REITs are usually professionally managed, with the goal of maximize shareholder value. That means positioning their properties to attract tenants and earn rental income, or making successful loans depending on the strategy of the REIT. The portfolios of investments should be managed in a way that builds value throughout long-term real estate cycles.

What types of properties does Grandway invest in?

The asset classes Grandway REIT invests in include but are not limited to the following:

Multi-family apartments
Commercial retail multi-tenant properties
Commercial retail single-tenant properties
Commercial and residential mortgages

How liquid are these investments?

Non-traded REITs, such as the Grandway REIT, are not liquid investments, which means you may think of an investment in the REIT as a long-term investment into real estate.

Are there any minimum qualifications I need to meet to be able to invest?

Only Accredited Investors can invest in Grandway REIT, subject to other legal limitations. For more details, please contact our Client Relations team.

What is the minimum investment amount?

The minimum investment is different for each class of shares, and will range between $100,000 - $2,000,000.

What type of reporting will I receive after I invest?

Grandway and our third party administrator provide regular reports to all investors at least quarterly. This includes statements, investment reports, and tax reporting data if applicable. This also includes letters and notices for certain transactions, such as special dividends. All documents will be provided by email.

Are investment returns guaranteed?

No. As with any investment opportunity, returns are never guaranteed in any way or form, and investors bear the risk of loss. Prospective investors must carefully review all offering documents and risk disclosures before making an investment in Grandway REIT or any investment program offered by Grandway. Prospective investors must also conduct their own evaluation and due diligence before making such an investment. Prospective investors are also strongly advised to seek advice from their investment advisors, tax advisors, and legal advisors before making such an investment.

Does Grandway offer 1031 exchanges?

No.

How does the investing process work?

After you have determined that you want to invest, our Client Relations team can guide you through the subscription process which includes submission of subscription documents, submission of investor documents for compliance and accreditation purposes, and transfer of funds.

How will my investment cash flow allocations be distributed?

Distributions are typically sent to the same bank account that was used for your original investment. However, we can accommodate changing a distribution bank account by request. Any changes to a distribution account will require you to prove valid ownership of the new account for compliance purposes. Distributions are never guaranteed in amount or timing, and you should carefully read the offering documents regarding the investment program you are interested in to fully understand the projected distributions and what risks are involved.

How often should distributions be expected?

Distributions depend on the specific investment program. They are typically governed by the relevant operating agreement of the relevant investment company and are typically at the discretion of the manager of the company. Often, distributions are provided to investors each quarter for deals that have stabilized cash flow (such as Grandway REIT). Please review the expected distribution schedule in the relevant operating agreement and offering documents for each investment program before making an investment. No distributions are guaranteed as to amount or timing.

How are legal documents handled?

All legal documents can be sent and signed electronically, typically through DocuSign. We also accept email delivery of signed documents, provided we can verify the sender’s identity. Electronic delivery allows for more efficient and seamless transfer of documents while maintaining the authenticity and security of your information. Investments are finalized once proper legal documentation and investor documentation are accepted, funds are confirmed received, and you are provided with completed countersignatures as applicable.

What type of tax documentation will I get for each investment?

Each real estate investment company in which you are invested will issue a K-1 to you. The K-1s are generally delivered by email and delivered in Q1 of each year, in time for a standard April 15th tax filing deadline. Investors in Grandway REIT will also be issued 1099s. 1099s are generally delivered by email at the end of January for the previous tax year.

What is Form 1099-DIV?

IRS Form 1099-DIV is a standard tax information form used to report dividends earned and capital gains distributions paid during a tax year. An investor of Grandway REIT will receive his/her 1099-DIV annually for the previous tax year, with respect to his/her investment in Grandway REIT.

Please note that Grandway does not provide tax advice. We strongly encourage you to seek advice from a tax professional.

What is Form 1099-INT?

IRS Form 1099-INT is used to report income from interest above $10 during a tax year.

Please note that Grandway does not provide tax advice. We strongly encourage you to seek advice from a tax professional.

Do I need to file tax returns in each individual state in which I have an investment?

This depends on your state of residence. Circumstances may vary if you have additional partnership income, expect to receive other K-1s, or in other circumstances. Please consult your tax advisor, CPA, or financial planner for specific guidance.

Please note that Grandway does not provide tax advice. We strongly encourage you to seek advice from a tax professional.