What is Real Estate Investment Trust (REIT)?

According to Invest Wisely, an initiative by the Securities and Exchange Commission Pakistan, the Real Estate Investment Trust (REIT) is a mutual fund that invests in properties and derives income from such investments for its unit holders.

A REIT Management Company (RMC) identifies a project and raises public money through an Initial public offering (IPO). The RMC then buys a property (in case of Rental REIT Scheme) and rents it out. The rent is then distributed to the unit holders (The shareholders of REIT Scheme are known as unit holders).

In case of a developmental or Hybrid REIT Scheme, RMC identifies the project, raises public money through IPO, constructs and then either sells the project or rents it out. The money received due to sale or rent is distributed among the unit holders.

About Invest Wisely: Invest Wisely is an initiative by the Securities and Exchange Commission Pakistan to empower individuals in Pakistan to understand the pros and cons of various financial products available in our markets and to create responsible investors that understand their rights and responsibilities while dealing in the capital markets. For details, visit the official website of the Securities and Exchange Commission Pakistan (SECP).

Tags: SECP, Business, Trade, Stocks, KSE

Related