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New REITs allow property owners to set buy-back price

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New REITs allow property owners to set buy-back price

By THE NATION

 

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A new category of real estate investment trusts (REIT) will be set up as a measure to help property businesses affected by the Covid-19 crisis.

 

 

The Securities and Exchange Commission (SEC) said the new REITs will come with a buy-back obligation under which properties are sold back to their owners at a specified period and value.

 

For example, if a hotel’s unit value is Bt100 during normal times, during the Covid-19 crisis, the owner can sell them to the REIT at Bt50 in order to boost financial liquidity.

 

The owner can specify that he/she will buy the hotel back in five years at Bt70, whether the value then is higher or lower than Bt70.

 

Under the other category, so-called “REIT with first right”, owners are given first option to buy back their properties but no price is fixed in advance. If the owners are not interested in repurchasing, the properties can be offered to other investors.

 

The SEC said that REIT investment units will be sold to general investors, with conditions and details similar to debentures.

 

Official conditions on the new REITs should be effective by the fourth quarter of this year, it added.

 

Source: https://www.nationthailand.com/news/30394786

 

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-- © Copyright The Nation Thailand 2020-09-19
 
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For a REIT investors it seems to be a good idea,not bad one.I am not sure how it will work in a real life.Better to stay aside for now.

 

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Isn't this just a "pawn Shop" for business? Hardly a new idea, and the only people that ever prosper are the pawn shop owners

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And what if the hotel owner is bankrupt in 5 years at the the time they offered to buy back the units at 70B, using the original post example? The REIT, and its investors, could get screwed.

 

And the REIT earns what on the unit for the next 2 or 3 years, until tourists return? Nothing, since there are no foreign tourists! And the REIT has to maintain the property and pay land taxes, security services, etc. etc. What a scam!

 

 

 

 

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This idea sounds so stupid I must not have read it correctly or understand this

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