The public limited company that intends to undertake Real Estate Investment Trust (REIT) management services shall have paid up capital of not less than Rs 50 million prior to applying for license and submit documentary evidence that it has equity of at least Rs 50 million before seeking approval of the Commission.
The Securities and Exchange Commission of Pakistan (SECP) here on Monday issued draft of Real Estate Investment Trust Regulations, 2015 for effective implementation of "Real Estate Investment Trust (REIT)" Scheme in Pakistan. REIT is a recognised investment vehicle in many developed countries like USA, UK, Australia, Malaysia, Japan, etc. Mutual funds, Modarabas, corporates, banks and other investors will have access to a new asset class (REIT Units) which will enable them to diversify investments and manage risks. The assets of the REIT Scheme will be maintained in the name of the Trustee and its affairs will be managed by a licensed REIT Management Company. The SECP has approved draft trust deed, business plan and conditional valuation report of the scheme.
As per draft rules, the "RMC" means a duly incorporated public limited company which has been licensed by the Commission under the Rules to undertake REIT Management Services. The promotors, directors and key executives of an RMC shall fulfil the proper criteria specified in Schedule annexed to the regulation.
As per draft rules, the Commission shall not grant approval to the Real Estate where in its opinion, for reasons to be recorded in writing, the title is defective or there are impediments to sale or partial sale or transfer or renewal of lease of the Real Estate or there are encumbrances or there is any other defect or the approval of the Real Estate is not in the interest of public or capital market. The Commission may approve the Real Estate and appointment of Trustee for the proposed REIT Scheme and ask the RMC to submit Business Plan, Preliminary Engineering Design and draft Trust Deed.
An RMC shall take approval of the Commission for the real estate to be transferred to the proposed REIT Scheme. Real Estate shall be within the territorial limits of Islamabad, Rawalpindi, Karachi, Lahore, Peshawar, Quetta, or any other city approved by the Commission, it said.
Under the conditions for registration of a REIT Scheme, an RMC shall, in the case of a Developmental REIT Scheme, would ensure that a binding purchase agreement has been executed for transfer of title of the Real Estate in the name of the Trustee; have obtained all requisite approvals from the concerned authorities to carry out the Project and the Lawyer's opinion, who is amongst the panel of lawyers approved by the Commission, shall confirm the same. In case of a Rental REIT Scheme, RMC shall ensure that a binding purchase agreement has been executed for transfer of title of the Real Estate in the name of the Trustee of a REIT Scheme; ensure that all requisite approvals from the concerned authorities including the completion certificate have been obtained, all dues are clear and the Real Estate does not have any defect which may render it ineligible for rent or subsequent sale by the REIT Scheme and the lawyer's opinion, who is amongst the panel of lawyers approved by the commission, shall confirm the same and ensure that the Real Estate; (i) has the last three (3) years' successful tenant occupancy record and (ii) it has at least 80 per cent tenant occupancy at the time of application.
If the RMC intends to convert a Developmental REIT Scheme into a Rental REIT Scheme, the RMC shall submit revised Business Plan duly approved by the unit holders representing at least three fourth (3/4th) in value of total outstanding units of the REIT Scheme. Provided that the RMC and its promoters shall not vote at such meetings and their presence shall not be counted towards requisite voting for special resolution, it added.
The Commission, if it deems necessary, may cause another valuation of any REIT Assets by a Valuer appointed by the Commission. Fees and costs incurred on valuation after the launch of a REIT Scheme shall be paid by the REIT Scheme.
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