SECP proposes amendments to REIT regulations

Permission to borrow against REIT assets included in draft

KARACHI: The Securities and Exchange Commission of Pakistan (SECP) said that it has introduced changes to the regulatory regime for real estate investment trusts (REIT) in a bit to promote investment in the real estate sector through the capital market.

In a statement released on Saturday, the SECP said that new amendments have been proposed on the basis of feedback and suggestions received from all stakeholders.

“It may be recalled that the regulatory framework for REITs was introduced in 2008,” the statement said. “In 2010 and 2015, the framework was revised whereby some of the requirements such as capital of REIT management company (RMC), size of REIT scheme and units to be held by a single investor were relaxed, to encourage launch of REIT schemes. In spite of these improvements, only one REIT scheme was launched because, among other factors, the requirements for setting up a REIT scheme were considered stringent by the industry.



“The amendments, among other things, envisage greater autonomy for the RMCs, enriched role of trustees, segregation of documentary requirements for developmental and rental REITs, permission to borrow against REIT assets, acquisition of commercially viable properties and permission to raise funds from investors before acquisition of property.”

The SECP said a regulatory framework has been provided for disclosure of value of target property and basis of management fee to be charged to a REIT scheme. “An RMC will have to refund money to IPO investors if property is not acquired within the specified time. The proposed amendments address all major concerns of the industry and also provide safeguards to protect interests of investors.”

The draft amendments have been placed on the SECP’s website for comments of the public as well as parties that are likely to be affected by the amendments.



“Views, if any, received within 14 days of the publishing of the draft amendments will be given due consideration by the SECP.”

Published in The Express Tribune, August 12^th, 2018.

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