Real Estate Investment Trusts

The Colombo Stock Exchange (CSE) and the Securities and Exchange Commission of Sri Lanka (SEC) have introduced a framework that enables the creation of Real Estate Investment Trusts (REITs) which provides real estate developers and owners an opportunity to transfer income-generating, fully completed properties into a REIT.

The company transferring the property to a REIT will receive funds from the public by issuing units of the REIT. This process and the REIT at large will be created and managed by a Managing Company licensed by the SEC.

REITs now give average investors an opportunity to reap the benefits of real estate investment and the advantages associated with investing in publicly traded securities on the CSE. While investing in Real Estate appears to be a popular choice, the rising cost of property poses a significant challenge to individual investors who typically resort to bank loans to finance such investments. This timely introduction by the CSE and SEC provides greater access to all investor segments to commercial real estate projects and an opportunity to benefit from the recently observed spiraling property prices.