Feb 23, 2012
Growthpoint in discussions with Treasury on Reit legislationBack
© Reuse this
De Klerk, who is the chairperson of the Property Loan Stock Association, added that significant progress has been made on the proposed Reit regulations, as well as finding an appropriate regulatory framework and efficient Reit structure for South Africa.
Finance Minister Pravin Gordhan said in his 2012 Budget speech on Wednesday that the Treasury would bring the governance and tax treatment of property loan stock entities in line with the present treatment of regulated property unit trusts.
The Treasury explained that rental income from property loan stock entities would fall under the pass-through regime that applied to property unit trusts.
Property unit trusts and property stock loan companies typically provide a commitment to distribute a minimum of 90% of their rental income to investors. The distribution of rental income is effectively tax-neutral in the hands of the property trust. The Treasury said property loan stock companies appeared to achieve roughly the same result but without official sanction.
“They issue investors a dual-linked unit that consists of a debenture and a share with the distribution in the form of interest. The dual-linked structure needs to be eliminated so that other entities do not undertake the same structure to avoid tax by relying on excessive debt,” it stated.
De Klerk told Engineering News Online that the Reit legislation would rebrand property loan stock companies and property unit trusts so they would be recognised as Reit companies under the Tax Act.
“This means that these entities will be exempt from capital gains tax.
“The new South African Reit structure will yield many benefits such as offering tax certainty and efficiency relating to distributions, which will be recognised as rental from a taxation point of view, therefore their income will retain its major,” he said.
This followed the National Treasury’s announcement last year after the implementation of the Tax Amendment Bill in April of its intention to finalise the Reit legislation before 2013.
The bill raised the priority of Reit legislation.
Meanwhile, Growthpoint CEO Norbert Sasse stated at the company’s interim results presentation in Johannesburg that above-inflation increases in electricity, rates, taxes and other administrative costs remained a concern.
Sasse said that access to liquidity was expected to remain good with strong demand for the company’s corporate bonds and equity, as well as a willingness by, among others, all the major banks to provide debt facilities to Growthpoint.
The company also anticipated its V&A Waterfront property portfolio in Cape Town would deliver over 7% return on cost of developed properties in line with its due diligence forecast.
Further, he noted that the overall vacancy factor is unlikely to reduce much below the current 4%, with negative rent reversions in the office sector unlikely to change until such time as national office vacancies across all grades start to improve.
The company reported a 6.1% distribution growth to 67.8c a linked unit, which was in the upper end of the guidance previously given to the market.
The company also reported an increase in revenue to R2.68-billion from R2.23-billion in the previous corresponding period.
Edited by: Mariaan Webb© Reuse this Comment Guidelines (150 word limit)
Creamer Media Senior Researcher and Deputy Editor Online
Other Property Developments News
JSE-listed property company Emira has appointed chartered accountant Greg Booyens as CFO, effective January 1, 2016.
The Bargaining Council for the Civil Engineering Industry (BCCEI) has been accredited by the Commission for Conciliation, Mediation and Arbitration (CCMA) to handle all civil engineering sector disputes. This would mean that companies that were not members of the...
London-listed specialist property real estate investment trust (Reit) Capital & Regional, with market capitalisation of some £469.5-million, has announced its intention to list on the JSE’s Retail Reit board. The company cited local investment apetite in its...
Updated 21 minutes ago Amid looming water shortages in the Cederberg and Matzikama local municipalities as a result of the low level of the Clanwilliam dam, the Western Cape government is closely monitoring the impact of unusually dry seasonal weather in some regions across the province....
Updated 34 minutes ago Downscaling by South African primary steel producers was “unavoidable” despite recent protection measures, outgoing Steel and Engineering Industries Federation of Southern Africa (Seifsa) president Ufikile Khumalo cautioned on Friday. Khumalo is also chairperson of...
Updated 38 minutes ago The 5.8 MW Adams and 5.8 MW Bellatrix solar projects, in the Western Cape, have been selected under the Department of Energy’s (DoE’s) Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), becoming the first projects under the programme to be...
Recent Research Reports
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
This Week's Magazine
At the sixth IQ Business conference held in Sandton last month, a panel of business leaders and academics advocated that business reclaims the initiative to spur growth in South Africa amid fragmented and haphazard political direction. Management consulting firm IQ...
The building industry is an essential component of the South African economy as it contributes about 15% to the gross fixed investment that drives the economy. However, with the country’s economy going through a tough time currently, this, in turn, reflects on the...
The recipients of the 2015 South African National Energy Association (Sanea)/South African National Energy Development Institute Energy (Sanedi) Awards were announced at a ceremony and banquet in Sandton last month. Sanea chairperson Brian Statham named Exxaro CEO...
As South African information technology (IT) firm EOH posted another full year of strong growth, CEO Asher Bohbot, known for his frank words, people-centric management style and stoic humanism, attributed the company’s continued South African and African growth to...
International heavy-equipment engine manufacturer Cummins’ regional distribution centre (RDC) in Woodmead, Gauteng, has halved the average logistics distribution time for clients in Southern Africa and allowed for critical or long-lead stock to be kept closer to...