Real Estate Investment Trusts in Thailand

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On October 11, 2010, the Securities and Exchange Commission of Thailand approved a regulatory framework for Real Estate Investment Trusts in Thailand. This began with passage of the Trust for Transactions in Capital Market Act BE 2550 (2007).

REITs will be actual trusts. They will be managed by REIT management companies, regulated by the SEC of Thailand and appointed by the trustee.

They will in effect replace the Property Fund for Public Offering (PFPO) structure which was established in 2002 to deal with distressed assets in the wake of the 1997 financial crisis.

Legal Requirements of Real Estate Investment Trusts in Thailand

They are allowed to leverage up to fifty percent of the value of their assets. They may invest in a wide range of real estate properties, barring only those that are illegal or immoral.

Investors buy trust certificates. Once the trust is established, it must be listed on the Thai Stock Exchange (SET) within 60 days. They must have capital of at least 500 hundred million baht.

No one person or related group of persons may hold more than 50% of the certificates. Foreign ownership of trust certificates is limited to 49% of the total.

Their investments in real estate properties must be at least 75% of total assets.

They may not invest in property that is less than 80% completed, so Thailand has chosen to restrict them from developing property. When they do, they must hold it for a period of at least one year.

They must pay out at least 90% of profits on an annual basis.

As of March 22, 2011 the Thai government has announced it is delaying implementation of the REITs in Thailand law while the Revenue Department reviews it.

Hopefully that process will be completed quickly, and soon Real Estate Investment Trusts in Thailand will be a reality.

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