1 - What are the goals of REIT's?
Despite having only nine-years history in our country, REIT's are important investment vehicles for bringing corporate capital to the financing resource-starved real estate sector as well as developing large and quality projects. With at least 25% of their stock open to the public, REIT's have eliminated the problem of liquidity, the most fundamental problem facing investments in real estate. Moreover, by bringing together the savings of individual and corporate investors into a common pool, they are able to realize large profit-generating real estate projects.
2 - What is the position of REIT's in Turkey?
As of November 2010, the number of REIT's carrying out transactions on the ISE since January 2nd, 1997 had reached fourteen. However, apart from the ones already on the ISE, there are others that have been established and are waiting for the appropriate time to issue shares to the public. It is expected that by year's end, with the completion of the planned public issuance, the number of REIT's and the total size of portfolios will have increased. It is known that foreign investors make up an important share of this figure.
3 - When did REIT's in the world begin operations?
The country in which REIT's are the most widespread is the USA. Having their origins nearly 40 years ago, during President Eisenhower's administration, there are now more than 300 REIT's (known as REIT's in the USA), with assets totaling $324 billion. REIT's, which are widespread in Europe and the Far East, are investment companies that provide financing to the real estate sector. CONTRIBUTIONS OF REIT's TO THE ECONOMY
4 - What is expected from REIT's in Turkey?
The main goal of REIT's in Turkey is to create a source of financing for the real estate sector, which has been experiencing problems in this area. Permitting public investment and directing the funds collected to the real estate sector are just two new sources. They are also enabling investors with limited savings to benefit from the increased value created by pooling of their resources, which enables them to invest in large, productive real estate investments, which would otherwise be beyond the reach of small-scale investors. Furthermore, REIT's want to be able to form a corporate and professional investment base in Turkey. They also have as one of their goals the creation of an alternative and transparent model to various inadequate practices that have been going on in the real estate sector.
5 - Is it possible for REIT's to act as a means through which real estate can be transformed into securities?
As a matter of fact, REIT's are in a position of creating a market, in the true sense of the term, in a real estate sector that lacks liquidity. Regardless of whether what is concerned is housing or shopping, entertainment, or commercial centers, the entire real estate sector can easily be made more liquid through the activities of REIT's, which can acquire these companies through the purchase of their stocks.
6 - Can REIT's be registered in a real estate sector where unregistered transactions are high?
REIT's subject to oversight by the Capital Markets Board (CMB) and open to the public. They are required to have their real estate purchases and their acceptance of mortgages appraised by companies designated by the CMB. This practice, along with carrying out transactions on the basis of current costs, brings transparency to the sector. Furthermore, the issuing of financial statements and regularly published reports on the profitability and cost of their projects, ensure a sound flow of information. This transparency on the part of REIT's will be a positive contribution to creating greater registration and oversight in the real estate sector.
7 - What are the main sources of financing of REIT's?
• Access to domestic and foreign capital through public tender
• Availability of loans worth triple that of their equity capital CONDITIONS THAT HAVE TO BE MET FOR SETTING UP REIT's
8 - What are the conditions that have to be met for setting up REIT's?
The most important conditions are the following:
• They have to be part of the registered capital system.
• They have to issue shares valued at no less than 25% of their issued capital to the public within 3 months.
• In companies set up all at once as REIT's, the cash equivalent of initial capital, and in those in the process of transforming themselves into REIT's, existing or issued capital, must not be less than 1 trillion TL.
• At least one of the founders must be designated as the leading investor.
9 - Can foreign investors be founders?
Upon getting the necessary permission, pursuant to the law creating regulations for the acquisition of real estate by foreigners, they can become founders.