ISLAMABAD: Securities and Exchanges Commission of Pakistan (SECP) has notified the Real Estate Investment Trust (REIT) Regulations 2008.
REIT will provide an opportunity to the general public to pool funds for investment in the real estate sector. It is introduced in a trust structure where the property itself will be vested in the name of the trustee and REIT Management Company (RMC) will manage the real estate on behalf of the unit holders.
The RMC will have a minimum of 20 percent stake in the scheme and will receive a management fee for managing the real estate. People will be allowed to invest through units of the REIT scheme, which will be listed on stock exchanges.
According to the REIT regulations, two types of REIT schemes are envisaged in Pakistan, i.e. developmental and rental. One scheme is allowed to carry out only one project at a time. In a development REIT, the RMC will construct a project and sell the property afterwards and the sales proceeds will be distributed among the unit holders. In the other type of scheme, which is the rental REIT, the RMC will buy a portfolio of properties and rent it out. The unit holders will receive returns through annual dividends out of the rental income.
REIT have been provided a tax exemption, if 90 percent of the income is being distributed. REITs will initially be allowed in Islamabad/Rawalpindi, Karachi, Peshawar and Quetta.
REIT started in 1960’s from the US and now REITs are available in 15 countries around the globe. Pakistan is the first country in the emerging markets to introduce REIT.
Source: Daily Times