Real Estate Investment Trusts, or REITs, are companies that own and manage income-producing real estate. These can include apartment buildings, shopping centers, data centers, hotels, or office spaces. Many REITs want to access U.S. capital markets because of the large number of investors and the high liquidity of U.S. stock exchanges. However, entering the U.S. market means following the rules and regulations set by the Securities and Exchange Commission (SEC).
The SEC treats companies differently depending on where they are based. A REIT that is incorporated in the United States is called a domestic REIT. A REIT that is based outside the United States is referred to as a foreign REIT. If a foreign REIT meets certain criteria, the SEC allows it to report as a Foreign Private Issuer, or FPI, which comes with less frequent and more flexible reporting requirements.
Understanding the difference between these two categories is essential for legal teams, investors, and company executives. The reporting requirements affect everything from how often financial results are shared, to what kind of accounting rules are followed, and even how executives must disclose their stock ownership.
Domestic vs. Foreign REITs: The Basic Distinction
Domestic REITs are those formed under U.S. laws. They are required to follow the full reporting schedule and disclosure rules that apply to all U.S. public companies. This includes regular financial statements, shareholder communications, and governance disclosures.
Foreign REITs are established in countries outside the U.S. If they meet the SEC’s definition of a Foreign Private Issuer, they are allowed to follow a separate set of reporting rules. To qualify, a foreign REIT must have most of its business and management located outside the U.S., and less than 50% of its voting shares owned by U.S. investors—or it must not be controlled by Americans even if U.S. ownership is higher. The SEC makes this determination to avoid forcing non-U.S. companies to follow rules that may conflict with their home countries’ legal systems.
Financial Reporting Frequency
One of the biggest differences between domestic and foreign REITs is how often they need to file reports. Domestic REITs must file detailed reports every quarter. These are called 10-Q reports and must be filed within about 40 to 45 days after the end of each quarter. In addition, they must also file an annual report called a 10-K, which provides audited financial statements, risk factors, and information about the company’s operations.
Foreign REITs, if they are classified as FPIs, only need to file a single report each year with the SEC. This is called a Form 20-F and must be filed within four months of the end of their fiscal year. The 20-F is similar to the 10-K but usually allows more flexibility. It reflects financial information using the standards of the company’s home country. Foreign REITs are not required to file quarterly reports, but they may choose to issue updates or press releases in between their annual filings.
This difference means that foreign REITs face less frequent regulatory burdens, which can be an advantage, especially for companies from regions where quarterly reporting is not common practice. However, it also means less timely financial data for investors.
Accounting Standards and Financial Statements
Domestic REITs must use U.S. Generally Accepted Accounting Principles (U.S. GAAP) when preparing their financial statements. These rules are detailed and specific, especially in how they handle revenue recognition, lease agreements, and depreciation—important areas for real estate companies.
Foreign REITs are allowed to use International Financial Reporting Standards (IFRS), which are used in many parts of the world, including Europe, Asia, and the Middle East. In the past, foreign companies were required to adjust their IFRS statements to match U.S. standards. However, the SEC changed this rule in 2007. Now, as long as a company uses IFRS issued by the International Accounting Standards Board (IASB), it does not need to reconcile its reports to U.S. GAAP.
This change reduced the workload for foreign REITs and made it easier for them to list in the U.S. However, investors in the U.S. must sometimes learn how to interpret IFRS statements, which may report income or asset values differently than U.S. GAAP.
Ongoing Disclosures and Event Reporting
Another area where the rules differ is how companies report major events. Domestic REITs must file a special report called an 8-K within four business days whenever something significant happens. Examples include a change in leadership, the acquisition of a property, new debt arrangements, or other material events.
Foreign REITs use a different form called a 6-K. This form is used to submit reports and news releases that are published in the REIT’s home country. The SEC does not set a strict timeline for when 6-K forms must be filed. Instead, companies send in the 6-K whenever they release new information to the public. This offers more flexibility but also means investors might not receive news as quickly or as consistently as they would with a domestic REIT.
Executive and Insider Reporting
U.S.-based executives of domestic REITs are required to disclose their stock ownership and any changes in that ownership. These rules fall under Section 16 of the Securities Exchange Act. Executives must file initial ownership reports, followed by real-time updates if they buy or sell shares. These disclosures help investors track insider trading and understand how aligned management is with shareholders.
Foreign REIT executives are not subject to Section 16 rules. They are not required to file stock transaction reports unless their home country mandates it. This gives foreign executives more privacy but also means investors may have less visibility into insider activity.
Shareholder Meetings and Proxy Statements
Domestic REITs must follow strict rules when it comes to annual meetings and shareholder voting. They must send out proxy statements that explain the items up for a vote, such as the election of board members or approval of compensation packages. These documents are very detailed and must follow U.S. disclosure laws.
Foreign REITs are not required to follow U.S. proxy rules. They can instead follow the customs and legal requirements of their own country. However, they still need to include governance and executive pay information in their annual 20-F reports. Investors in the U.S. who buy shares in a foreign REIT must understand that they may have less influence over corporate decisions than they would with a domestic REIT.
Corporate Governance and Sarbanes-Oxley Compliance
The Sarbanes-Oxley Act (SOX) is a U.S. law that sets standards for financial reporting and internal controls. Domestic REITs must follow all SOX rules, including having independent audit committees, requiring executive certifications of financial statements, and assessing internal controls every year.
Foreign REITs are subject to some parts of Sarbanes-Oxley, but they are exempt from others. For example, they are not required to have the same type of independent audit committee as U.S. companies. They also do not have to provide the same internal control reports unless their home country requires it.
That said, many foreign REITs voluntarily adopt U.S. governance practices to build trust with investors and meet exchange listing standards.
Communication Rules and Fair Disclosure
Domestic REITs must follow a rule called Regulation Fair Disclosure (Reg FD). This rule says that companies must share important information with all investors at the same time. It prevents a company from giving special updates to certain analysts or investors before making them public.
Foreign REITs are not legally required to follow Reg FD. However, many of them do so voluntarily, especially if they are listed on U.S. exchanges like the NYSE or NASDAQ. These exchanges often expect all listed companies—foreign or domestic—to maintain fair and transparent communication.
Registering and Exiting the U.S. Market
When a domestic REIT wants to sell shares to the public, it must register with the SEC using Form S-11. This document includes detailed financial and legal information. After going public, the REIT must continue regular reporting and comply with SEC rules as long as it has a certain number of shareholders.
Foreign REITs register with the SEC using Form F-1 and are subject to lighter ongoing obligations if they remain qualified as Foreign Private Issuers. If a foreign REIT decides to exit the U.S. market, it can deregister more easily than a domestic company by meeting conditions under SEC Rule 12h-6. These include low trading volumes in the U.S. and continuing to be listed in its home country.
Conclusion
Domestic and foreign REITs both play an important role in global real estate investing, but they follow different rules when reporting to the SEC. Domestic REITs are required to provide more frequent and detailed reports, use U.S. accounting standards, and follow strict disclosure laws. Foreign REITs that qualify as Foreign Private Issuers enjoy more flexibility. They can file only once a year, use international accounting standards, and avoid some of the more demanding rules.
This flexible system helps attract global companies to U.S. markets while still protecting investors through basic transparency. For investors, it’s important to know these differences before choosing between a domestic or foreign REIT. For legal and compliance teams, knowing which set of rules applies is the first step toward maintaining strong, legal operations and avoiding regulatory risks.
If a REIT from the Arab world or other regions is planning to enter the U.S. market, working closely with legal advisors who understand SEC requirements is essential for success.
