Real Estate Investment Companies 101
Introduction
Real estate investment companies (“REICs”) are among the most significant capital markets institutions in Türkiye, bridging the capital markets and the real estate sector. Through REICs, investors gain access to real estate markets and the opportunity to generate returns from this sector without directly acquiring property.
The legal framework governing REICs is set out under the Communiqué on Principles Regarding Real Estate Investment Companies (III-48.1) (the “Communiqué”) issued by the Capital Markets Board (the “CMB”). The Communiqué contains detailed regulations covering a wide range of matters, from the establishment and operations of REICs to their portfolio composition and disclosure obligations.
This article outlines the key features and operating principles of REICs within the framework of the Communiqué.
Key Characteristics
Pursuant to the Communiqué, REICs are capital markets institutions established to issue shares for the purpose of operating a portfolio consisting of real estate, real estate projects, rights based on real estate, infrastructure investments and services, capital market instruments, money market transactions at Takasbank and reverse repo transactions, time deposits or participation accounts denominated in Turkish Lira, foreign currency deposits (time or demand) or special current and participation accounts, as well as subsidiaries and other assets and rights to be determined by the CMB.
REICs may be established either to operate a portfolio exclusively consisting of infrastructure investments and services or a portfolio composed of other assets and rights specified in the Communiqué. They may also be formed to invest in a specific project, real estate asset, or infrastructure investment/service, or to operate within a particular sector.
For REICs that will exclusively operate a portfolio of infrastructure investments and services, it is mandatory that their articles of association explicitly state—both at the time of establishment and upon conversion—that at least 75% of the company’s total assets will consist of such investments and services.
As such, REICs are structures designed to invest in high-return-potential real estate assets and projects. In addition to generating rental income from assets within their portfolios, these companies aim to realize gains from purchase and sale transactions. Profits generated may either be distributed to shareholders as dividends at year-end or reinvested to finance new investments.
Accordingly, investors who acquire REIC shares benefit indirectly from real estate income without directly owning property.
In addition to dividend income, investors may also benefit from potential capital appreciation of REIC shares traded on the stock exchange. The REIC model aims to address liquidity constraints inherent in real estate investments, as investors can more easily buy and sell publicly traded shares instead of dealing with illiquid physical assets.
Establishment and Structural Framework
REICs may be established directly as joint stock companies or existing joint stock companies may be converted into REICs through amendments to their articles of association in compliance with the Communiqué.
Key requirements during establishment or conversion include:
- the company must be established as a joint stock company subject to the registered capital system or must have applied to the CMB to adopt such system,
- as of 2026, the initial capital (for establishment) and the existing paid-in or issued capital and shareholders’ equity (for conversion) must each be at least TRY 1,500,000,000[1] (or TRY 2,250,000,000 for REICs exclusively investing in infrastructure),
- founders or existing shareholders must meet the qualifications set out in the Communiqué,
- the articles of association must comply with the Communiqué, and
- the company’s trade title must include the phrase “Real Estate Investment Company.”
One of the defining characteristics of REICs is their public company nature. Following an initial public offering, at least 25% of the issued capital must consist of publicly traded shares.
Companies established as REICs or converted into REICs must apply to the CMB for approval of their prospectus within three months following registration of their establishment or amendment of articles of association with the trade registry, after fulfilling the requirements set forth in the Communiqué. Failure to apply within this period results in the loss of REIC status.
Scope of Activities and Investment Areas
The primary objective of REICs is to generate rental income or capital gains by investing in high-return real estate or real estate-based projects.
Within this scope, REICs may acquire, dispose of, lease, or promise to acquire or dispose of various types of real estate, including land, plots, residential units, offices, shopping malls, hotels, logistics centers, warehouses, parks, hospitals, and similar assets.
REICs may also invest in financial assets within certain limitations and provided that such activities do not constitute brokerage services. However, their activities are strictly limited under the Communiqué.
For instance, REICs are prohibited from:
- Accepting deposits,
- Undertaking construction activities related to real estate or infrastructure investments themselves,
- Extending loans,
- Engaging in continuous short-term real estate trading, and
- Granting loans to related parties (other than wholly owned subsidiaries) without an underlying sale of goods or services.
These restrictions ensure that REICs remain focused on their core function of investment and portfolio management.
Portfolio Structure and Restrictions
The Communiqué imposes significant limitations on REIC portfolio composition.
Under Article 24 of the Communiqué, REICs are required to allocate at least 51% of their total assets to investments in real estate, real estate projects, rights based on real estate, units of real estate investment funds, and certain companies in which they hold 100% of the capital.
Additionally, land held in the portfolio for more than five years without any development activity may not exceed 20% of total assets.
The Communiqué also introduces restrictions on the types of real estate that may be included in the portfolio. As a general rule:
- Buildings must have obtained occupancy permits and established condominium ownership,
- Only real estate and real estate-based rights that are free of mortgages or encumbrances that materially affect their value may be included.
The Communiqué provides detailed guidance on the application and scope of these requirements.
Valuation
One of the defining features of REICs is their strong emphasis on transparency and valuation mechanisms.
Pursuant to the Communiqué, for certain transactions, the fair value and fair rental value of the relevant assets and rights must be determined by valuation institutions authorized by the CMB.
Transactions requiring valuation are set out under Article 34 of the Communiqué and include, for example: inclusion or removal of real estate from the portfolio, leasing of real estate within the portfolio, and acceptance of real estate as collateral.
Conclusion
REICs offer an alternative and institutionalized structure for investors seeking exposure to the real estate sector. Their ability to provide liquidity compared to direct real estate investments, combined with professional management and a regulated framework, are among their key advantages.
At the same time, the detailed regulatory regime introduced by the Communiqué ensures that REIC activities remain within defined boundaries and aims to protect investors.
In this respect, REICs will continue to play a significant role in the financing and diversification of real estate investments.
- As set out in the CMB Decision no. 68/2461 dated 30.12.2025, as published in the CMB Bulletin of 31.12.2025.
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