By Kyle Fishburn

1. Globalization of the securitized real estate industry continues to be a popular topic for discussion as more countries adopt REIT legislation. What has fueled this international expansion and what lies ahead?

U.S. REITs are proven entities for the public ownership of real estate, and other nations that have seen the benefits of the U.S. REIT structure have sought to mimic or replicate the model for the same reason. As global interest in securitized real estate assets and investment liquidity grows, adoption of REIT legislation will follow.

Some countries seek to attract capital by opening their real estate markets to individuals as well as institutional investors. For example, major industrialized nations like Germany and the U.K. have recently enacted REIT legislation.

2. What should U.S. investors know before investing in international real estate securities?

It is very important to understand the nuances of the different REIT structures, legislatively as well as organizationally. Though different nations have found inspiration from the U.S. model, not all REITs function the same way. In some foreign markets these entities would best be characterized as "REIT-like" to differentiate them from their American counterparts. It is crucial that investors educate themselves before moving into foreign REIT markets.

Additionally, since REITs are typically viewed as income vehicles, it is critical to understand the tax implications for each country. For example, dividend distributions to non-resident holders of Malaysian REITs are subject to a 28 percent withholding tax. For Singapore REITs, non-resident holders currently are subject to a 10 percent dividend withholding, increasing to 20 percent in 2010.

3. Although increasing, the number of U.S. real estate companies operating a global platform remains relatively small. What will be the characteristics of the companies that successfully accomplish this strategy? Should investors target those companies?

In certain property types, the platform more readily translates to an international business. For example, industrial REITs specializing in bulk distribution facilities, such as ProLogis (NYSE: PLD) and AMB Property Corporation (NYSE: AMB), have invested globally for a long time. For these operators, their tenants are the same here and abroad: Fortune 1000 corporations with a presence in multiple locations around the world. Additionally, bulk distribution facilities are rather generic, with the same physical characteristics whether they're located in Los Angeles or Tokyo.

Retail real estate owners have also been a hit overseas; U.S. REITs, including Simon Property Group (NYSE: SPG), have successfully exported their ability to create festive, entertaining environments that are conducive to attracting visitors and selling merchandise.

4. What advice do you have for seasoned investors in U.S. REITs as they look at the global market going forward?

Given the huge volume of capital that's earmarked for international real estate and the many new nations and publicly traded entities entering the industry, it's reasonable to expect market volatility. It's critical that investors do their homework, stay abreast of legislation as it progresses, and get to know where and with whom they are investing.

Emerging markets experiencing high growth like India and China are attracting lots of interest due to their sheer size and the expected growth of their economies.

The expected growth of disposable income in China has caught the attention of REIT management. Entertainment Properties Trust (NYSE: EPR), which specializes in ownership of multiplex movie theaters and other entertainment-based real estate, has indicated its exploring opportunities to develop properties in conjunction with a local partner.

Additionally, Taubman Centers (NYSE: TCO) established a Hong Kong office as a base for its planned Asia-Pacific growth.

However, it is important to know the microeconomics of the countries that drive a company's business, such as the experience and quality of management, its financial flexibility and tenant relationships. It is also important to know the macroeconomic environment in which it operates, including the national and regional economy, supply and demand for space and socio-political atmosphere.