By Oranong Chaitong
CEO, Prospect REIT Management Co., Ltd.
Manager of the Prospect Logistics and Industrial Property Fund (PROSPECT)

What is the difference between “TRUST” and “REIT”? Many investors may have questions about this. Let’s find the answers together.

What is “TRUST”?

The term “TRUST” or Trust for Transactions in Capital Market refers to a legal relationship established by a trust deed. A “trust” is not a legal entity but a relationship that involves three parties:

  • Settlor
  • Trustee
  • Beneficiary

Currently, the Securities and Exchange Commission (SEC) has announced the establishment of trusts, which can be categorized into three types:

1) Active Trust that issues trust certificates, further divided into:
- Institutional Investor & High Net Worth Trust Fund (II & HNW Trust Fund)
- Real Estate Investment Trust (REIT)
- Exchange-Traded Fund in trust form (Exchange Traded Trust (ETT))
- Special Purpose Trust for asset securitization
- Sukuk Trust
- Infrastructure Trust

2) Passive Trust for holding assets or for debt repayment in securities issuance, further divided into:
- Employee Stock Ownership Plan (ESOP)
- Employer-Employee Joint Investment Project (EJIP)
- Trust for issuing derivative warrants
- Reserve Account or Sinking Fund in trust form for bond repayment
- Trust for asset accounts in debt collection for special purpose entities
- Trust for transactions involving the sale of digital tokens linked to or generating income from real estate

3) Private Equity Trust for venture capital activities, whether under category 1) or 2)

What is “REIT”?

The term “REIT” or Real Estate Investment Trust is one type of trust for investment management (Active Trust).

A REIT is a property fund owned by a trustee and does not have legal entity status. The founder of a REIT is the one who becomes the REIT manager and offers trust units for sale. The funds raised from selling trust units are given to the trustee to invest in income-generating real estate, ensuring regular rental income to provide returns to investors. The establishment of a REIT is done through a trust deed, assigning the REIT Manager to manage the REIT and the Trustee to oversee the REIT Manager's duties and safeguard the REIT's assets.

From the information above, it is clear that the two terms differ. Referring to REIT as a trust fund, as commonly heard, may not accurately convey its meaning, as the term trust fund encompasses a wide range of trusts.

Source: SEC Office and Stock Exchange
Announcement of the Securities and Exchange Commission No. Kor. 23/2564 regarding the types of transactions in the capital market that can use trusts >>> https://www.set.or.th/th/products/listing/files/Know_trusts.pdf
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