Gauteng Business News

Send  Share  RSS  Twitter  27 Aug 2008

Property: Transition to REIT Structure aims to attract International Investors


Recent Gauteng Business News

Addressing the issues and challenges facing South Africa's listed property sector's transition to the best-of-breed international Real Estate Investment Trust (REIT) structure in Gauteng, South Africa, Brian Azizollahoff, CEO of Redefine Income Fund, will address the upcoming Real Estate Investment World Africa 2008 conference.
Azizollahoff, who has played a key role in this transition since it was initiated at the Property Loan Stock Association's conference "The Road to REITs" in 2006, will join a panel discussing the key developments in the implementation of REITs in SA.

"The concept of REIT's has been embraced by both National Treasury as well as the property sector as a whole -- this includes the property loan stocks (PLS), the property unit trusts (PUT) as well as the unlisted PLSs," says Azizollahoff.

"A great deal of effort has been expended in making the introduction of REIT legislation a reality. However, due to a further delay on the part of Government in respect of the response document, which answers to comments received from the industry on the discussion paper previously circulated, the process has been setback and will probably only see the light of day somewhere around the early part of 2010," believes Azizollahoff.

In the UK, the top three REIT's account for 60% of the sector which currently has a market cap of 21.7 billion pounds, which is now down from its height of 41.1 billion pounds, reports Azizollahoff. The sector tradability stands at 210% on a 12 month rolling basis. Mid- to large cap companies have the highest tradability with 11 of the 18 REITs over 160% per annum.

"For South Africa to emulate this even closely, there will need to be further consolidation within the industry as tradability in the sector is on aggregate around 50% to 60%. Tradability is important to international investors in REITs who are currently eyeing South Africa as a destination and who the local property sector will need to attract. Foreign investment in the local property sector on aggregate is less than 3%." Azizollahoff notes.

The Real Estate Investment World Africa 2008 Conference is being held on 2 -- 5 September at Sandton Convention Centre, Gauteng.

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