SECP notifies REIT Regulations

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has notified Real Estate Investment Trust (REIT) Regulations 2015 through SRO 328(I)/2015 to replace REIT Regulations 2008.
Through a notification of REIT Regulations 2015, the paid-up capital requirement of 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 the stock exchanges.
The minimum stake of RMC in a REIT Scheme has been reduced from 20 percent to five percent.
The notification also said concept of strategic investor has been incorporated who will hold 20 percent stake in a REIT Scheme.
Other salient features of the REIT Regulations 2015 included simplification of approval process and allowing performance fee for REIT managers. A criteria for rental track record has been prescribed for REIT eligible properties.
The latest REIT Regulations 2015 have been notified after extensive public consultations to adequately cover investor risks and make the regulatory framework more conducive and practicable.
The REIT Regulations envisage primarily two types of REIT schemes, ie, Developmental REIT schemes for construction of properties and Rental REIT schemes for renting out completed properties.
Considering the potential for real estate market and robust business activity in large cities, REITs can be established in cities other than provincial and federal capitals, it said.
Fund raising from Pre-IPO investors has been allowed in the name of Trustee after registration of REIT Scheme subject to sharing of business plan.
Buyers of property from a developmental REIT Scheme have been adequately protected as the customer advances will be received through banking channels and in the name of the Trustee only and subject to certain disclosure requirements, it said.