Real Estate Investment Trust: "REIT"

The Capital Market Supervisory Board, under Thailand’s Securities and Exchange Commission (SEC), issued regulations governing the issuance and offering of Real Estate Investment Trust (REIT) units in Thailand (the “REIT Regulations”), effective on January 1, 2013. These allow developers to employ new fundraising methods while providing an alternative investment product.

REITs are expected to drive growth in the Thailand real estate market and will definitely represent an important step in the evolution of Thailand’s capital market and financing system for property. It is expected that the full roll-out of REITs will be completed in the Thai market within 2014.

Key requirement for REITs are as follows:

  1. Paid-Up Capital: must not less than 500 million Baht.
  2. Holding Restriction: Persons in the same group shall not hold more than 50% of the total trust units sold. A trustee and persons in the same group may not hold more than 5% of the total trust units. Foreign restrictions are applicable to REITs investing in real freehold property in Thailand.
  3. Permissible Investment: Investment can be made in real property, whether leasehold or freehold, with a total value of not less than 500 million baht, or shares in a company established solely for the purpose of undertaking the same business as the REIT. The REIT must hold not less than 99% of the total amount of shares in such a company . In this respect, procedures enable the trustee and/or REIT manager to control the company’s conduct of business.

 

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