Then it becomes like property developer...
Reit is appealing to investors is because its yield, and alternative way of rent collecting.
By allowing Reit involves in property development (buy a land and build a building), it just means money needs to lay out for the development and at least few years without any income, which defies the original purpose of Reit.
Mind that Reit generally doesn't have much cash due to 90% payout ratio, hence it just means the reit may need to borrow more for the development cost needed.
So it is best interest for SC to limit the allowable for buying vacant land for developing.
There are property developers that buying vacant land, develop into malls or offices and make an rental income afterwards.
I do not see why reit must directly involve in property development.
Reit supposely an passive income generating instrument, involving into direct property development, it become more "active" and expose to more risk already.
true that.
would rather REITS buy over a complete property to manage than to invest 15% into a JV with developer.