AN APPRAISAL OF THE LEGAL REGIME FOR REGULATION OF REAL ESTATE INVESTMENT TRUSTS IN NIGERIA

Abstract

This paper employs the doctrinal method of research to appraise the legal framework for regulation of Real Estate
Investment Trust (herein after called ‘REIT’) in Nigeria. REIT is used as an alternative source of finance for
real estate development in Nigeria. The real property market has some peculiar characteristics in contrast to the
capital market where stocks and shares can be sold to meet immediate demands. Unfortunately, REIT is facing
certain challenges which militate against effective operation of the REIT industry in Nigeria. This paper is focused
on the challenges connected to the laws regulating operation of REIT in Nigeria. Thus, the question is how effective
is the legal framework for regulation of REITs in Nigeria? The objective of the paper is to answer the research
question. The paper finds that the classification of REITs into Equity, Mortgage, and Hybrid REITs is unknown
to the Investment and Securities Act which governs REIT in Nigeria. More so, the Nigerian REITs are not
performing well like REITs in other jurisdictions because of the interplay of numerous laws that negatively impact
on the REIT industry in Nigeria and legal regime regulating REIT is not adequate. It is thus proposed that a
comprehensive legislation be enacted to provide the adequate legal framework for operation and also enable the
Securities and Exchange Commission to provide the necessary institutional and regulatory support to the REIT
industry, especially investors who are interested in the real estate sector.