THE DEVELOPMENT OF ISLAMIC FINANCE IN

THE DEVELOPMENT OF ISLAMIC FINANCE IN - THE DEVELOPMENT OF...

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THE DEVELOPMENT OF ISLAMIC FINANCE IN AMERICA: THE FUTURE OF ISLAMIC REAL ESTATE INVESTMENT TRUSTS Nicole C. O’Neal Editors’ Synopsis: In this Article, the author presents an overview of the global development of Islamic Real Estate Investment Trusts, a recently-invented investment vehicle that has found popularity in Islamic nations. The author presents the unique aspects of these investment trusts and analyses the challenges they face as they begin to emerge within the United States. Ultimately, the author concludes that because Islamic Real Estate Investment Trusts provide unique advantages that outweigh any challenges they face in the United States, they will continue to gain acceptance on American soil. I. I NTRODUCTION .................................................................. 279 II. REIT S : A B RIEF B ACKGROUND ...................................... 281 III. T HE I SLAMIC REIT .......................................................... 284 IV. T HE M ALAYSIAN I-REIT G UIDELINES ........................... 287 V. C HALLENGES FOR THE I-REIT IN A MERICA ................. 291 VI. C URRENT U.S. R EGULATION OF I SLAMIC F INANCE R ELEVANT TO I-REIT S .................................................... 293 VII. C ONCLUSION ..................................................................... 295 I. I NTRODUCTION The purpose of this Article is to discuss the recent creation of Islamic Real Estate Investment Trusts (I-REITs) and the viability of their use in the United States. At the outset, it is important to recognize that what makes a financial instrument “Islamic” is not dependent upon the nature of the assets or parties involved. A financial transaction between American parties involving American assets can be structured in a manner that complies with the requirements of Shariah law, thus making it “Islamic” in nature. Nicole C. O’Neal is an attorney in the Miami office of Capricorn Mercurial Consulting, LLC. Ms. O’Neal received her J.D. from Florida International University College of Law, and is a Tax LL.M. candidate at the University of Alabama School of Law. First, I give honor to God. I would like to extend much gratitude and appreciation for their guidance and assistance to Ms. Cyra Choudhury; Ms. Heather Hughes, Associate Professor, American University, Washington College of Law; Mr. Michael R. Grupe, EVP, Research & Investor Outreach, NAREIT; Mr. Brandon M. Benjamin, Manager, Research Activities, NAREIT; and Judge Frank A. Shepherd, Third District Court of Appeal for the State of Florida.
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280 44 REAL PROPERTY, TRUST AND ESTATE LAW JOURNAL Shariah law 1 governs all aspects of life for Muslims, providing guid- ance and principles by which they make moral and economic decisions. 2
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This note was uploaded on 10/09/2011 for the course 323 3232 taught by Professor 3232 during the Spring '11 term at Apex College.

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THE DEVELOPMENT OF ISLAMIC FINANCE IN - THE DEVELOPMENT OF...

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