Property Loan Stock Association chairman Norbert Sasse called on Thursday for the formation of a property industry task team before the end of the year to formulate a Real Estate Investment Trust (REIT) structure for SA's listed property sector.

He said at a REIT conference the association hosted in Sandton that the task team should consist of representatives of the Property Loan Stock Association, the Association of Property Unit Trusts, commercial property association Sapoa, the accounting and tax sectors, as well as national treasury and tax authorities.

The Property Loan Stock Association hosted the two-day conference, which ended yesterday, to boost awareness of REITs and garner support for their introduction in SA. A REIT has unlimited borrowing capacity, as does a property loan stock company in SA, while a property unit trust may borrow only up to 30% of total assets. Like a property unit trust, a REIT does not pay capital gains tax, but a property loan stock company does.

A REIT, like a property loan stock company, can invest in another listed property firm, but by law a property unit trust may not. The leading REIT market is the US, and listed property companies in Europe have also adopted the structure.

Sasse said the Property Loan Stock Association knew the listed property sector had to adopt a structure that "looks like and feels like a REIT if we want the South African property sector to continue to grow".

"As part of that growth strategy we are hoping to attract foreign investors to help."

Sasse said property loan stock companies and property unit trusts did not speak with one voice. The association was thinking of employing a fulltime official "to drive the REIT process forward, representing our interests and the interests of the listed property sector as a whole".

Business Day
Publisher: I-Net Bridge
Source: I-Net Bridge