ISLAMABAD: After thorough consultation, the Securities and Exchange Commission of Pakistan (SECP) has replaced Real Estate Investment Trust (REIT) Regulations 2008 with REIT Regulations 2015 through SRO 328(I)/2015.
The SECP notified the new regulations after extensive public consultations to adequately cover investor risks and make the regulatory framework more conducive and practicable. REIT Regulations envisage primarily two types of REIT Schemes i.e. developmental REIT schemes for construction of properties and rental REIT schemes for renting out completed property.
Several key changes have been made in the new regulations to accommodate stakeholders and key players in the real estate sector. As per the 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 stock exchanges.
The minimum stake of RMC in a REIT Scheme has been reduced from 20% to 5%. Concept of strategic investor has been incorporated who will hold 20% stake in a REIT Scheme. Other salient features of the REIT Regulations 2015 include simplification of approval process and allowing performance fee for REIT managers. A criteria for rental track record has been prescribed for REIT eligible properties.
