What is a Real Estate Investment Trust (REIT)?

In many developing nations, the concept of Real Estate Investment Trusts (REITs) is well known. The concept is new to Zimbabwe and offers many opportunities to investors. In simple terms, a REIT is a collective investment scheme which provides investors (institutional and retail) with an opportunity to invest in income producing real estate.

A REIT is registered in terms of the Collective Investment Schemes (Internal Schemes) Regulations, 1998 as read together with the Collective Investment Schemes (Internal Schemes) (Amendment) Regulations, 2019 (No. 5) to own, manage and invest in real estate in Zimbabwe.

REITs as internal schemes are licensed and regulated by the Securities and Exchange Commission of Zimbabwe (SECZIM) in terms of Securities and Exchange Act [Chapter 24:25], the Collective Investment Schemes Act [Chapter 24:19] and Income Tax Act [Chapter 23:06].

A REIT is established through a Notarial Deed of Trust Deed which is executed by its Promoter, a REIT Manager and the Trustee.

A Promoter of a REIT is the person sponsoring the setting up of the property fund. Generally, the promoter will be the largest investor in terms of units held in the fund.

A REIT Manager is a person who is tasked with the management of the asset management functions related to the REIT and its property assets on behalf of the investors or unit holders. It goes without saying, that a unit holder, is a registered holder of one or more REIT Units in the fund.

It is important to note that there is a difference between a REIT Manager and Property Manager. The latter is tasked with managing the day to day operations of the REIT, such as leasing and facilities management, whereas the REIT Manager is charged with managing the asset management functions related to the REIT.

A Trustee is a person who represents the interests of the investors to ensure that the ‘property fund’ is properly managed. The Trustee is also the custodian of the documents of title for the underlying investments of a REIT.