SECP revamps regulatory framework for REITs

ISLAMABAD: In continuation of its efforts to foster the growth of real estate investment trusts (REITs), the Securities and Exchange Commission of Pakistan has revamped the regulatory framework by introducing significant amendments to the Real Estate Investment Trusts Regulations, 2015.

The amendments are aimed at providing a more conducive regulatory environment for the establishment of formal real estate sector in the country, thus promoting documentation of the economy.

The commission approved these amendments following a comprehensive review of the regulations, primarily focusing on simplified regulatory requirements, unitholders’ protection and industry dynamics.

The SECP conducted extensive consultations with stakeholders, including REITs management companies and Mutual Funds Association of Pakistan to revisit the existing regulatory framework for REITs. The proposed amendments were also notified to solicit public comments and the public feedback has been taken into account.

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The amendments include the concept of private investors along with eligibility criteria to invest in REIT scheme, an introduction of grace period for mandatory listing; requirement of valuation from two separate valuers at the time of transfer of real estate to REIT scheme, enhancing RMCs capacity to borrow and issuance of right units.

It is pertinent to mention that in case of major decisions pertaining to REITs, the requirement of unitholders’ approval has also been prescribed to protect their interest and enhance their role and participation in the decision-making process.

It is expected that the amendments will help promote formal real estate sector in Pakistan in particular and develop the economy in general.

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