SECP amends REIT regulations to boost transparency, early listings
- Commission says the amendments introduce clearer timelines for the transfer of real estate and shares of special purpose vehicles, to promote earlier listing of REIT schemes
The Securities and Exchange Commission of Pakistan (SECP) has notified amendments to the Real Estate Investment Trust (REIT) Regulations, 2022, aimed at simplifying procedures, strengthening governance, and enhancing transparency in the operations of REIT schemes.
According to the regulator, the amendments introduce clearer timelines for the transfer of real estate and shares of special purpose vehicles, to promote earlier listing of REIT schemes and improve their visibility and development as a capital market asset class.
The revised framework also strengthens the roles and responsibilities of REIT Management Companies (RMCs) and trustees, addresses regulatory arbitrage across different REIT structures, and improves alignment with the Shariah governance framework.
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In addition, procedures for the registration of trust deeds and approval for the registration of REIT schemes have been streamlined.
Key changes include a refined definition of real estate to clearly distinguish between its passive and active components, as well as the introduction of income and asset test requirements in line with international best practices. The SECP said these measures will ensure that REIT schemes remain primarily invested in, and derive income from, real estate assets.
The amendments were finalized after an extensive stakeholder consultation process. This included the issuance of a consultation paper, multiple in-person and virtual meetings with stakeholders such as RMCs, trustees, banks, mutual funds, law firms, and consultants, followed by further consultations on the draft amendments and a concluding session held in Karachi.
REIT Regulations provide the legal framework for the establishment, operation and management of REIT schemes by RMCs.
Under a REIT structure, an RMC pools funds from investors for investment in real estate projects, allowing unitholders to gain proportional ownership in income-generating properties and benefit from rental income and potential capital gains.
The SECP said the notification of the amended REIT Regulations is available on its official website.
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