Thursday, October 22, 2020

New REITs allow property owners to set buy-back price

Sep 19. 2020
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By THE NATION

A new category of real estate investment trusts (REIT) will be set up as a measure to help property businesses affected by the Covid-19 crisis.

The Securities and Exchange Commission (SEC) said the new REITs will come with a buy-back obligation under which properties are sold back to their owners at a specified period and value.

For example, if a hotel’s unit value is Bt100 during normal times, during the Covid-19 crisis, the owner can sell them to the REIT at Bt50 in order to boost financial liquidity.

The owner can specify that he/she will buy the hotel back in five years at Bt70, whether the value then is higher or lower than Bt70.

Under the other category, so-called “REIT with first right”, owners are given first option to buy back their properties but no price is fixed in advance. If the owners are not interested in repurchasing, the properties can be offered to other investors.

The SEC said that REIT investment units will be sold to general investors, with conditions and details similar to debentures.

Official conditions on the new REITs should be effective by the fourth quarter of this year, it added.

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