RIDE (material Estate Investment Trust) is a mostly quoted real estate company, which is occupied with the possession and that management of real estates. REITs became 1960 in the USA and afterwards among other things in the Netherlands, Australia, Canada and Japan certified. In recent time its permission took place in France and Belgium. They stand now before the permission in further European markets (gepl. 2007 in Germany and Great Britain).

Legal form and structure

Depending upon national regulation can RIDE different legals form to have. In the USA, Australia and Canada this can be a Trust or in the USA also a corporation. Belgium decided for the form unit trust fund, while limits the Netherlands and France one responsible finance company prescribes. That DO NOT RIDE must compellingly at the stock exchange noted be, the stock exchange quotation is however the rule. Into Germany probably only the corporation comes as legal form into question during an introduction of REITs.

REITs obtain their profits by letting and farm lease of own real estates as well as from profits from sale of these real estates. Their fortune consists therefore completely predominantly of real estates and participation in other real estate companies. Liquid means will constitute usually only a small portion. The profits paid of RIDE to high extent to the shareholders. These minimum payments are prescribed legally, them reach from 80% to 100%.

REITs are obligated only in exceptional cases to take portions back. The shareholders are referred to the sale over the stock exchange.

Differences of open real estate funds - RIDE

In Germany comparable participation in possession and management of several real estates is offered particularly in form of the open real estate fund. RIDE of it however substantially would differ.

• REITs are acted like shares at the stock exchanges and are subordinate to the balance guidelines. Therefore a larger transparency than the open real estate funds is attributed to them.
• REITs must pay neither body nor trade tax, are obligated however to disburse 90% of the vat yield to the portion owners as dividend; thus the taxation takes place with the investors. A double taxation of the yields does not take place thus.
• Riding funds (English RIDE find) are unit trust fund, which invests the investor funds exclusively in REITs.

Situation in Germany

"The initiative Finanzplatz Germany "(IFD), carried in particular by banks, demanded end of 2003 the introduction of REITs to Germany. So bound real estate possession can be mobilized in the enterprises, which enterprises are supplied thereby to liquidity and the financial market in Germany at the same time are arranged more attractive. In order to make for the enterprises possible bringing in their real estates without taxation of the quiet reserves, a reduced taxation ("exit tax ") is to apply.

CDU/CSU and SPD have in the coalition contract (there number II. 3.) agreed that they create "basic conditions for new plant classes in Germany "want, to it also "the introduction of material Estate Investment Trusts (Reits) belongs on the condition that the reliable taxation is guaranteed with the investor and positive effects on property market and local conditions are to be expected ". Since since April 2006 in parts of the SPD Bundestag faction resistance against the introduction of quoted real estate companies is formed, the entry into force of the law changes planned for beginning of 2007 appears questionable.

In particular the reliable taxation with the shareholder presents itself as problematic, since the payment with the investor as capital return and not when rental arrives. Double taxation agreements (DBA) assign regularly the taxation right for capital returns to the state, in which the taxpayer resides. Therefore Germany would lose the taxation right, if (fiscal) foreigners acquire portions of German REITs. At present is discussed to solve this problem by a fragmentation in a REIT-AG and a special estate. Great Britain however wants to limit for this purpose the direct participation to under 10% and to avoid so at least the reduced dividend taxations after DBA.

International designations

Depending upon national legislation REITS carries different names:

Related links

• Position papers of the IFD
• Position paper of the delegates round, pro old and Hauer (SPD) from 5 April 2005

Articles in category "RIDE"

We found here 12 articles.