Actual - Real Estate

The purpose of a Real Estate Investment Trust is to greatly reduce or possibly eliminate corporate income tax. In the U.S., Real Estate Investment Trusts pay very little to no federal income tax,

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

but are generally held to a number of special requirements that are set forth in the Internal Revenue Code. One of those requirements is to distribute ninety percent of their annual taxable income

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

in the form of dividends to its shareholders. The trust holds a portfolio of assets and the net cash flow is passed on to its share holders in the form of dividends or distributions.

Real Estate

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

nvestment Trusts are a form of Royalty trusts that specialize in actual property. These properties can be anything from office buildings to nursing homes to large parcels of land. Since real esta

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

e is a liquid asset, closed end funds are generally the best way to go. The first Real Estate Investment Trust was introduced in the United States in 1960 and was designed to give smaller investor

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

a way to make investments in large scale real estate that was currently income producing. This enabled the small time investor to make an investment in large scale commercial property that would

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

ave previously been unavailable to them.

In 1991-1992, there was a general slowdown in the real estate market. This time is the real jumping point for real estate investment trusts and when they

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ecame a mass investment vehicle. Faced with redemption demands on the part of unit-holders, real estate mutual funds were presented with the unpalatable option of selling valuable real properties

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

nto a distressed market to raise cash. Many of them, therefore, chose to close off redemptions and converted into Real Estate Investment Trusts, since then most commonly known as REIT's. Only a few

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

open-end real estate mutual funds continue to own real estate directly. Most now invest in shares of real estate-related companies.

The typical REIT distribution is equal to 85-95 percent of its i

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

come which is rental income from properties. These distributions are made to the shareholders generally on a quarterly basis. Because REIT shareholders are entitled to a tax break for depreciatio

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

n of the real estate held in the REIT, these distributions usually get a tax break. Because of this situation, a high percentage of the distribution is tax deferred. REIT's yields and the market

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

rice of units are greatly influenced by the interest rates as they move. The movement of the interest rates has a direct correlation with the yields in a REIT, meaning that when interest rates ris

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

, the cost of REITs will drop, but the yields will rise as well. There are typically two catches with REITs. The first is that since investors are 'unit- holders' rather than shareholders, they are

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

potentially jointly and severally liable together with all other unit-holders (plus the trust itself) in the eventuality of insolvency. Instead of limited liability, investors rely on the REIT's ma

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

agement to have property, casualty and liability insurance, prudent lending policies and other reasonable safeguards in place. Nevertheless there is always the possibility of a problem - say a cata

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

trophic fire or a building collapse - that is not covered by insurance. This may have seemed like a very small matter prior to the attacks on the World Trade Center in 2001. Since then, however, it

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

is something that has to be taken seriously.

The second problem with REITs is less transparent. All real estate properties depreciate in value over time (not the land, only the buildings). Depreci

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

tion can be somewhat slowed down by earmarking at times significant amounts of money for maintenance and renewal of facilities. Since most of the REIT's income is being distributed and the capital

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

ost allowance is being allocated to investors, investors are factually getting their own capital back over time. As such, the book value of the underlying real properties will be steadily depleting

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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