SEC issues regulation to support the formation of REIT
for private investors
Investment
The SEC issued regulation to support the formation of real estate investment trusts (REIT) for private investors in order to help entrepreneurs accessing capital funding quickly, increasing funding options for entrepreneurs who face liquidity problems, expanding opportunities to invest in potential assets both in the country and abroad. This will become effective from 16 June 2021.
In order to increase flexibility in fundraising, the SEC introduced an alternative REIT investment choice, a private REIT, which is different from the general REITs as follows:
➢ It must be a trust that is established for the purpose of raising fund from institutional investors and REIT managers (“RM”) and their associate persons. However, it must not be for the purpose of exploitation from the management of personal property of any specific person or groups, and the offering for sale of trust units is deemed to be approved by the SEC in general.
➢ At least 75% of the value of the offered trust units including the amount of secured loan (if any) must be invested in real estate to acquire ownership or leasehold rights. The remaining 25% can be invested in any type of financial instrument or other financial transactions.
➢ There is no requirement on securities, minimum value, and collateral of loans.
➢ The offeror of the trust unit shall file the offering form (filing form), and draft prospectus with the SEC. The filing form and draft prospectus will be effective after 1 business day from the date the SEC receives the filing form. A report of the sale shall be made to the SEC within 15 business days from the closing date of the offering.
In this regard, the SEC aims to make the capital market to play an important role in helping entrepreneurs to access capital more quickly, enhancing liquidity in business operations by providing investment opportunities for institutional investors with high analytical and risk-taking potential to have a wide range of investment options and consistent with the current situation.
Legal Insight Vol. June 2021 of Bangkok Global Law
The PDF file can be downloaded via the link as set below.
SEC issues regulation to support the formation of REIT for private investors_Bangkok Global Law