REIT
A REIT (Real Estate Investment Trust) is a listed company form that owns and operates income-producing property, and that avoids corporation tax in return for distributing nearly all of its profit to shareholders as dividends. The model lets ordinary investors own a share of large property portfolios by buying a share, in the same way you buy shares in any other listed company. REITs are very common in the United States, the United Kingdom, France and a number of other countries, and they make up a large part of the global market for listed property.
Norway has no REIT regime of its own. There is no Norwegian company form with the tax exemption that characterises a REIT, where the company avoids tax in return for mandatory distribution. Norwegian investors who want listed property exposure instead buy shares in ordinary listed property companies such as Entra or Olav Thon Eiendomsselskap, or they invest in foreign REITs. These Norwegian companies pay ordinary corporation tax and have no duty to distribute their profit, so they resemble a REIT in form, but not in tax treatment.
If you are used to the Norwegian market, it is useful to know what a REIT is for two reasons. First, the term appears in all international property analysis and whenever foreign investors assess Norwegian assets. Second, REITs work as a benchmark: the pricing of listed REITs gives a quick signal of how the capital market views property as an asset class, and it indirectly affects the required rate of return in the Norwegian unlisted market too. The Norwegian alternatives to a REIT are otherwise unlisted structures such as property syndicates and property funds, where investors join forces to own property through a property company, often set up as a separate SPV.
A REIT offers high liquidity, because the share can be bought and sold daily on the exchange, but in return the share price moves more in the short term than the value of the underlying buildings. This is the classic trade-off between listed and direct property: easy trading and diversification against more price noise.
From Placepoint's dictionary: REIT
More information: Finanstilsynet, Store norske leksikon: eiendom
English: REIT (Real Estate Investment Trust). No equivalent tax regime exists in Norway.
Frequently asked questions
What is a REIT?
A REIT (Real Estate Investment Trust) is a listed company form that owns income-producing property and avoids corporation tax in return for distributing nearly all of its profit as dividends. It lets ordinary investors own a share of large property portfolios by buying a share.
Do REITs exist in Norway?
No. Norway has no REIT regime of its own with tax exemption in return for mandatory distribution. Norwegian investors instead buy shares in ordinary listed property companies or invest in foreign REITs.
What is the Norwegian alternative to a REIT?
Listed property companies that pay ordinary tax, or unlisted structures such as property syndicates and property funds, often set up through an SPV.
Why is the REIT relevant to the Norwegian market?
The term appears in all international property analysis and whenever foreign investors assess Norwegian assets. REIT pricing is also a benchmark for how the capital market views property, and it indirectly affects the required rate of return in Norway.