Real Estate Investment Trust (REIT)

Types of REITs

In Pakistan there are three basic types of REITs

1. Rental REITs

A Rental REIT scheme is established for the object of making investments in commercial or residential Real Estate with a purpose of generating rental income. In a Rental REIT, a fully constructed property is first bought by the RMC and then rented out. The revenues derived are distributed among the unit holders.

2. Developmental REITs

In a Developmental REIT scheme, land is acquired by the REIT for the purpose of development of commercial, industrial, residential Real Estate through construction or refurbishment and subsequently sold or rented. The proceeds from sale/rent of the property are then distributed to the unit holders.

3. Hybrid REITs

Hybrid REITs in Pakistan combine the investment strategies of both Rental and developmental REITs by investing in both properties and mortgages. Although not as heavily favored as compared to pure equity REITs, they remain stay attractive investment alternative.