The possible impact of the proposed South African reit structure on the listed property sector

Abstract

A Real Estate Investment Trust is simply a body that utilises collective funds to manage and purchase income producing properties. The terminology is widely recognised internationally, although in South Africa a structure exists which is not too dissimilar to the Real Estate Investment Trust, the listed property sector in South Africa is undergoing a huge shift as a result of the more distinguished Real Estate Investment Trust structure being proposed by the National Treasury. This report focuses on establishing whether the proposed structure is expected to have an impact on the listed property sector in South Africa. The hypothesis is tested through the use of literature and research pieces stemming from countries where the structure is currently in existence. The proposed South African Real Estate Investment Trust structure is studied critically to determine the key issues that will impact on performance of a listed fund, and is also compared to a selection of existing structures around the world. The key findings were conclusive in that the Real Estate Investment Trust is expected to have a positive impact on the listed property sector.