Bank Shahr has received permission from the Central Bank of Iran to launch a real estate investment trust.
According to a press release seen on the bank's website, the private lender plans to increase its resources, boost lending capacity and cut losses, for which it sees a REIT as key.
Iran Fara Bourse (IFB) in October launched the first real estate investment trust to help the key housing industry that has seen high and rising prices over the years as never before.
Economy Minister Ehsan Khandouzi earlier said that the government would make use of REITs to reactivate its unproductive assets. He called on state-owned banks to make use of REITs for unloading their extra assets.
in related news, the Civil Pension Fund Capital Value Management Group Company said it will offer 30 million investment units each worth 10,000 rials. The fund has a five-year operational license which can be extended.
REITs own, operate or finance income-generating real estate. Modeled after mutual funds, REITs pool capital from assorted sources. This makes it possible for individual investors to profit from real estate investment -- without having to buy, manage, or finance the properties themselves.
It is publicly traded on securities exchanges and investors can buy and sell them like stocks. REITs typically trade under substantial volume and are considered highly liquid instruments.
Establishment of REITs has indeed created a new opportunity for the government, banks and private companies to put to effective use their idle assets.
Bank assets have piled up over the years mainly due to impaired loans, bad debts, settlement of unpaid government debt to banks, closure of branches and failed investments.
They are under mounting pressure to end their highly controversial non-banking activities by getting rid of expensive real estate, holdings and trading companies.
