About REIT

What is a REIT – Real Estate Investment Trust

A Real Estate Investment Trust (REIT) is a company that owns or finances income-producing real estate. REITs are like mutual funds. REITs provide investors of all types with regular income streams, diversification, and long-term capital appreciation. REITs allow individuals to invest in real-estate properties in a similar way you purchase a share of a company.

A REIT collects a pool of money (from individuals and institutional investors) to buy real estate. The Unit holders of a REIT Scheme earn a share of the income produced through renting or selling the real estate property without actually having to bear the hassle of buying or managing the property on their own.

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REIT in Pakistan

REIT Regulatory Framework in Pakistan was introduced by the Securities and Exchange Commission of Pakistan (SECP) in January 2008 which was subsequently repealed and replaced by REIT Regulations 2015. These regulations are comprehensive with the principal focus on the protection of interests of general investors in a REIT Scheme. In Pakistan, “REIT Scheme” means a listed closed-end fund registered under Real Estate Investment Trust Regulations 2015. The three types of REIT schemes introduced by SECP in Pakistan:

Developmental REIT

REIT scheme which invests in real estate to develop it for Industrial, Commercial or Residential purpose through construction or refurbishment.

Rental REIT

A rental REIT scheme invests in commercial or residential Real Estate to generate rental income.

Hybrid REIT

This is a scheme having both a portfolio of buildings for rent and a property for development.

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How REITS Operate?

Muhammad Ejaz, Chief Executive Officer at Arif Habib Dolmen REIT Management Limited discusses & explains the progress of our company since 2009 & our main offering.

Benefits to Investors

01. Investment Diversification

Diversification aims to reduce portfolio volatility for investors. Adding REITs to an investment portfolio reduces risk since REITs have little correlation with other assets, including stocks and bonds.

02. Favorable Policy

REITs have to distribute at least 90% of its profits as dividends to the unit holders to avail tax exempt status. High payout reduces the risk of management for investors.

03. Debt Free Investment

REITs are wholly equity financed and only unsecured borrowing is permitted under the regulations. Hence, REIT has a debt free structure and free from related cash flow distress and default risks.

04. Transparency

REITs follow the same rules and regulations of disclosure as other public listed companies.

05. Liquidity

The REIT are required to be listed at the stock exchange which provides investors the option to exit anytime. Moreover, REIT units are priced by the stock market each day and readily respond to the changes in market sentiments.