REITs Gone Global

09/16/2013 | by

As the articles in this issue of REIT clearly demonstrate, REITs and REIT investment today are global in their scope. Nearly 30 countries around the world have adopted REIT legislation. Among the G-8 nations, all but Russia have REITs. Additionally, some of the world’s leading emerging markets, including China, India and Indonesia, are considering plans to implement their own REIT rules.

As interest in REITs grows worldwide, one of NAREIT’s key missions is working to achieve better global understanding of REITs. NAREIT pursues that mission by working with its sister real estate organizations in the Real Estate Equity Securitization Alliance (REESA) to conduct ongoing, direct outreach to policymakers, regulators and investors in countries around the world.

Significantly because of this effort, REITs around the world have come to look and function very much the same. While rules may vary from country to country on issues like the minimum amount of the required annual REIT dividend distribution or the amount of leverage that is permissible, REITs created in recent years have been based largely on the U.S. model. Fundamental to all REITs around the globe today is the requirement that the REIT distribute the bulk of taxable income to its shareholders annually in the form of dividends, making the REIT an equity investment that combines a steady, bond-like flow of current income with the opportunity for capital appreciation characteristic of stock investment.

REITs around the world have come to look and function very much the same.

Commonality in the REIT rules is important because it enables investors around the globe to have a meaningful understanding of the fundamental factors that affect REIT investment performance. That common understanding is the basis for the investor confidence that makes cross-border investment possible, enabling a smooth flow of global capital into REITs around the globe.

Greater knowledge and understanding additionally supports the development of global REIT mutual funds and ETFs, which make international REIT investment available to an even larger population of investors.

NAREIT also has worked to encourage the globalization of REIT investment and REIT investment products through the FTSE EPRA/NAREIT Global Real Estate Index Series. The index series was created by NAREIT and its partners FTSE Group, one of the leading index providers, and the European Public Real Estate Association (EPRA). It includes more than 400 listed real estate companies with a combined equity market capitalization of almost $1.6 trillion, 55 percent of which is represented by REITs.

NAREIT’s efforts and those of its global partners have helped to make the REIT a global approach to securitized real estate investment. I have been pleased to have been part of those efforts over the past year as NAREIT’s 2013 Chair, and I will continue to support them after I pass the leadership of our organization on to my successor in November at REITWorld 2013 in San Francisco. I look forward to seeing you there.