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REIT: Real Estate Investment Trust
- REIT is a financial instrument that real estate operators or property owners can use to create an optimal fund-raising structure for the purpose of investment and new project development
- REIT is established to raise funds from general investors including retail and institutional investors who invest in high-potential real estate
- REIT brings the fundraising through real estates in a property fund up to international standards, increasing flexibility in fundraising through management by debt financing experts, and supporting the long-term growth of the Thai real estate industry.
- REIT raises funds from investors to invest in real estate which generates regular revenue in a form of rent. REIT may acquire ownership in real estate (freehold) or invest in leasehold and then lease such real estate so that REIT can generate regular revenue from rent and pay dividends to investors. The trust manager is the person responsible for managing the trust so that it generates returns for shareholders.
Benefits of REIT
| Business operators |
A fundraising alternative that uses real estate which generate returns in a form of rent to raise funds from investors to further invest and develop new projects.
| Investors |
- Enjoy long-term returns and low price fluctuation
- Able to invest in a wider range of real estates managed by real estate investment and management experts
- No need to inject large investment as is normally required in a direct investment in real estate
- Receive 90% of the adjusted net profit
Benefits of REIT
| Business operators |
A fundraising alternative that uses real estate which generate returns in a form of rent to raise funds from investors to further invest and develop new projects.
| Investors |
- Enjoy long-term returns and low price fluctuation
- Able to invest in a wider range of real estates managed by real estate investment and management experts
- No need to inject large investment as is normally required in a direct investment in real estate
- Receive 90% of the adjusted net profit
REIT Structure
Type of Investments of REITs
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Assets which REIT can invest in
| All types of real estates such as office buildings, shopping centers, and warehouses,. However, there must be no disputes that have a significant impact on utilization of the real estate |
| Real estate located in the country and/or abroad |
| Real estate which is ready to produce benefits of ≥ 75% of the value of the total unit offered including loan proceeds (if any). The excess can be used to invest in other assets such as government bonds and bank deposits |
| Real estate under construction. The investment to be used to develop the real estate until completion must not exceed 10% of the trust's total asset value and must be able to show that there is sufficient working capital for the development without jeopardizing the trust's viability |
| The acquired real estate must have a total value of at not less than THB 500 million |
| The REIT which leases real estate to anyone suspected of using it for unethical or illegal business |
Assets which REIT can invest in
| All types of real estates such as office buildings, shopping centers, and warehouses,. However, there must be no disputes that have a significant impact on utilization of the real estate |
| Real estate located in the country and/or abroad |
| Real estate which is ready to produce benefits of ≥ 75% of the value of the total unit offered including loan proceeds (if any). The excess can be used to invest in other assets such as government bonds and bank deposits |
| Real estate under construction. The investment to be used to develop the real estate until completion must not exceed 10% of the trust's total asset value and must be able to show that there is sufficient working capital for the development without jeopardizing the trust's viability |
| The acquired real estate must have a total value of at not less than THB 500 million |
| The REIT which leases real estate to anyone suspected of using it for unethical or illegal business |
General characteristics of REIT
| Establishment | The REIT trust deed/draft trust deed must comply with the Trust for Transactions in Capital Markets Act B.E. 2550 and the SEC's related notifications The name of the REIT shall reflect key characteristics and investment policy of the trusts |
| Size | The paid-up capital after the units offering is ≥ THB 500 million to support the required investment |
| Types |
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| Investments |
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| Obtaining Benefits |
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| Benefits paid to trust unitholders | ≥ 90% of adjusted net profit |
| Debt financing and creation of encumbrance |
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| Number of unitholders after IPO | ≥ 250 |
| Trading | Must be listed on the SET |
Fundraising channels
Remarks:
* Fundraising in a form of company including:
1) Company with general business operation;
2) Company whose main business is to hold shares (Holding company); and
3) Company investing in infrastructure project (Infrastructure company)
Listing of Real Estate Investment Trust (REIT) on SET
A type of fundraising as Real Estate Investment Trust (REIT) must seek approval from the SEC and get the trust units listed on SET. According to SEC rules, the qualifications of trust units, REIT units, and how to apply for SET listing are as follows:
Unit Trust refers to the trust certificate that bears entitlement of the holder in receiving benefits from trust as specified by SEC rules.
- Be fully paid
- Holding bearer’s name
- No restrictions on transferring the trust units, except the legal restrictions. Such restrictions must be stated in the trust deed.
REIT refers to the trust for investing in property as per SEC rules. REITs have to be:
- Approved by SEC
- Having the SEC-approved trust manager and SEC-licensed trustee
- Having retail trust holders for no less than 20% of each listed tranche
Appointing Thailand Securities Depository Co., Ltd. (TSD) or other SET-approved persons to act as securities registrar
- The trust founder (person who is going to be the trust manager when a trust is founded) submits listing application
- Requesting listing for all issued trust units
- Submitting the request and required documents, plus paying fee, to SET
- The SET will consider listing request within seven days upon receiving complete and correct information
Process of Trust Unit Listing Consideration
Remarks :
- The applicant can be the trust founder, who is going to be the trust manager, or the trust manager specified in the trust deed as authorized person for submitting the listing application.
- The applicant can submit the draft filing, draft trust deed, and Kor documents, to SET, so that SET could consider the listing along with SEC’s process
Q&As
The trust deed and filing form must contain the following messages stating that the trust units are:
- Fully paid
- Bearer’s name
- Have no restriction in transferring the trust units, exception for the legal restrictions
To make SET quickly consider the application, the applicant should consulting with SET staff, then submit any complete documents to SET without having to wait for all documents on the check list.
Related Regulations
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Forms
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