From 1 May 2013, a new listed property investment structure will be introduced in South Africa: The SA REIT (pronounced “essay reet”).
Like existing listed property structures in South Africa – property loan stocks (PLSs) and property unit trusts (PUTs) – REITs (Real Estate Investment Trusts) own income-producing commercial property.
But the SA REIT provides a simple, clear tax structure and is an internationally recognisable tax dispensation for investment property. More than 25 countries in the world use a similar REIT model like the US, Australia, Belgium, France, Hong Kong, Japan, Singapore and the UK.
National Treasury formally published the REIT tax legislation for South Africa on 25 October 2012 under the new Taxation Legislation Amendment Bill Section 25BB of Income Tax Act. Bringing South Africa’s listed property sector in line with international standards, the JSE published new Listing Requirements on 28 March 2013 that will facilitate the SA REIT.
Estienne de Klerk, Chairman of the REIT committee, and executive director Growthpoint Properties says: “The SA REIT is a significant development for South African publically traded real estate and will ring in a new era for our listed property sector, allowing it to grow with tax certainty.”
Investors can expect to see SA REITs listing under the JSE REIT board from 1 May 2013.