Real Estate Investment Trusts (REITs) are special purpose business trusts or corporations that purchase, develop, manage and maintain real estate properties and earn income through rent or at times sale of these properties. They mobilize funds from unit holders comprising of individuals and companies. REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
Due to their very nature, REITs can be quite easily moulded to comply with Shari’a primarily because the core activity of a REIT is investing in real estate assets and structure of a REIT is simple.
Learning Outcome Statements
The candidate should be able to:
1 Understand and explain the concept of a Real Estate Investment Trust (REIT)
2 Comprehend the structure of a REIT and know the roles and relationships of various stakeholders involved
3 Discuss the benefits of investing in REITs
4 Recognize the different forms of REITs
5 Differentiate an Islamic REIT from a conventional REIT and delineate the role of Shari’a boards in ensuring Shari’a compliance of REITs
6 Explain Ijarah and Diminishing Musharaka financing structures for property investments
7 Understand the concept of Waqfs and their management
8 Assess the potential of Islamic REITs internationally
