Real estate investment trusts in comparative perspective : an analysis of selected aspects of the United States, the United Kingdom and German regimes

Abstract

Real Estate Investment Trusts (REITs) have been an established and successful part of indirect real estate investment in the United States for over 40 years, but were only introduced in the United Kingdom and Germany in 2007. It is clear that the two European legislators took a close look at the US model before shaping their own REIT legislation. Based on this assumption this dissertation examines the single requirements set by each of the three REIT regimes in terms of wording, meaning and purpose. All REIT regimes feature some common, fundamental characteristics, but differ in detail. This research paper further seeks to define the major differences between the regimes and to analyse why the legislators chose to take different approaches. It is argued that, considering the demands of globalising financial and real estate markets, the introduction of REITs in Germany and the United Kingdom was a necessary step to maintain the markets' competitiveness. However, the analysis reveals that the two European, and in particular the German, legislators, have taken a too restrictive approach for their REIT vehicles when compared to the successful US REIT structure. Reform should be envisaged, relaxing some of the existing requirements for REITs under the UK and German regimes. This would meet both practitioners’ demands and also promote the structures' competitiveness on the global stage.