JSE to welcome REITs regime

April 02, 2013


 

Johannesburg, 2nd April 2013 – From yesterday the 1st April 2013 South Africa will implement a local Real Estate Investment Trust (REIT) regime that will usher in a new era for the listed property sector. From this date all property companies currently listed on the JSE either property loan stocks or property unit trusts will convert to a REIT structure and any new listings in this sector will have to comply with JSE REIT listing requirements.

 

“The REIT structure is in line with international best practice and having a globally understood structure will make our listed property sector much more attractive to foreign investors. The tax advantages of the new structure will also make the listed property sector much more attractive to local investors,” says Patrycja Kula Business Development Manager at the JSE. When South African listed property funds convert to this system South Africa will be the 8th largest REIT market. The REITs structure will bring about much needed tax and regulatory changes

 

This change follows the formal announcement of REIT tax legislation for South Africa, published on 25 October 2012 by National Treasury to introduce this internationally recognised structure in South Africa. Under this new legislation, capital gains tax is no longer payable on disposal of assets and without this tax activity in the sector will increase.

 

To qualify as a REIT fund, companies need to have:
• a minimum of R300 million in assets
• a total debt to asset ratio of no more than 60%
• 75% income from property rentals
• a distribution minimum of 75% of the distributable profits (dividends)

 

For investors, there is certainty in that 75% of all net income is paid out and tax exposure is determined only by the tax status of the recipient. International performance comparisons will be easily made and the investor is protected within an internationally defined and regulated industry.

 

FOR MEDIA ENQUIRIES:

Victoria Williams/Roz Thomas 
Corporate Communications Consultants
Tel: (011) 463 2198 Cell: 072 452 1772 / 082 925 8806
Email:
victoria@corpcom.co.za / rozt@corpcom.co.za

On behalf of Patrycja Kula
Business Development Manager
JSE Ltd

 

About JSE Limited
As South Africa’s only full service securities exchange, the JSE connects buyers and sellers in four different financial markets, namely equities, equity derivatives, commodity derivatives and interest rate instruments. The JSE Ltd offers the investor a truly first world trading environment, with world class technology, surveillance and settlement in an emerging market context. It is amongst the top 20 largest equities exchanges in terms of market.