SECP introduces new framework for REITs
Paid-up capital requirement brought down to Rs50m
PHOTO: STOCK IMAGE
ISLAMABAD:
The Securities and Exchange Commission of Pakistan (SECP) has notified Real Estate Investment Trust (REIT) Regulations 2015 that will replace REIT Regulations 2008.
According to the SECP, the latest REIT regulations have been notified after extensive public consultations to adequately cover investor risks and make the regulatory framework more conducive and practicable.
REIT regulations envisage primarily two types of REIT schemes including developmental REIT schemes for construction of properties and rental REIT schemes for renting out completed properties.
In REIT Regulations 2015, the paid-up capital requirement for REIT Management Companies (RMCs) has been brought down from Rs200 million to Rs50 million. To include mid-sized properties into REIT schemes, the minimum fund size requirement of Rs2 billion has been reduced to bring it in line with the listing regulations of stock exchanges.
The minimum stake of RMC in a REIT scheme has been reduced from 20% to 5%. The concept of a strategic investor has been incorporated, who will hold a 20% stake in a REIT scheme.
Other salient features of the REIT Regulations 2015 include simplification of approval process and allowing a performance fee for REIT managers. A criterion for rental track record has been prescribed for REIT eligible properties.
Considering the potential for the real estate market and robust business activity in large cities, REITs can be established in cities other than provincial and federal capitals.
Published in The Express Tribune, April 21st, 2015.
The Securities and Exchange Commission of Pakistan (SECP) has notified Real Estate Investment Trust (REIT) Regulations 2015 that will replace REIT Regulations 2008.
According to the SECP, the latest REIT regulations have been notified after extensive public consultations to adequately cover investor risks and make the regulatory framework more conducive and practicable.
REIT regulations envisage primarily two types of REIT schemes including developmental REIT schemes for construction of properties and rental REIT schemes for renting out completed properties.
In REIT Regulations 2015, the paid-up capital requirement for REIT Management Companies (RMCs) has been brought down from Rs200 million to Rs50 million. To include mid-sized properties into REIT schemes, the minimum fund size requirement of Rs2 billion has been reduced to bring it in line with the listing regulations of stock exchanges.
The minimum stake of RMC in a REIT scheme has been reduced from 20% to 5%. The concept of a strategic investor has been incorporated, who will hold a 20% stake in a REIT scheme.
Other salient features of the REIT Regulations 2015 include simplification of approval process and allowing a performance fee for REIT managers. A criterion for rental track record has been prescribed for REIT eligible properties.
Considering the potential for the real estate market and robust business activity in large cities, REITs can be established in cities other than provincial and federal capitals.
Published in The Express Tribune, April 21st, 2015.