real estate stock corporation with listed shares): A – stock corporation listed on the stock exchange (as a rule; other legal forms are possible), – which invests capital in buildings and land as well as in mortgage-backed securities/loans, – manages these and – seeks to generate a return via rental income and appreciation in value (company which is formed to pool funds from a large number of investors in order to acquire a significant portfolio of real estate properties and/or interest in mortgage-backed securities/loans). – The value of Reits shares is determined by supply and demand on the stock exchange. For this reason, they are clearly different from open-ended real estate funds – particularly widespread in Germany – whose share price is based primarily on appraisals of the market price of the underlying properties. – Reits do not “suffer” from the sale of their units (shares; Aktien), as these do not flow back to the Reit, but find a new buyer on the stock exchange. The Reit can therefore go about its business completely unaffected by sales. In addition, Reits generally offer investors greater security than the usual open-ended real estate funds. This is because Reits and their real estate holdings are constantly revalued on the market, whereas in the case of open-end real estate funds, hidden overvaluations can pile up through the years, as experience has taught us. – In many countries, Reits helped the public sector get rid of its real estate holdings. As an incentive, a reduced tax rate was levied on the profits from the sales to a Reit (exit tax). – In Germany, Reits were sometimes demonized and accused of promoting exorbitant rents. However, to the extent that Reits would have led to rents in line with the market in previous “social housing,” the support of poor private households is always more targeted than housing rents far below the cost price. Thus however now in the German Reits law of May 2007 it was specified that in Reits no residential real estates may be brought, which were finished before the beginning of the year 2007. – See concrete gold, ground credit institution, exchange traded funds, funds, closed, real estate funds, real estate funds, open, real estate prices, constitutional article one. – Cf. BaFin Annual Report 2005, pp. 148 f. (REITs in the wake of illiquid open-ended real estate funds), BaFin Annual Report 2006, pp. 146 f. (new legal basis provided by the Act on German Real Estate Stock Corporations with Listed Shares (REIT Act – REITG) of 28. May 2007), p. 151 (requirements for prospectus), BaFin Annual Report 2007, p. 80 f. (insurers may invest in REITs), BaFin Annual Report 2008, p. 49 (IOSCO publishes report on supervisory regulations of real estate funds and REITs in various countries).
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/