SA Reit chairperson Izak Petersen
The South African real estate investment trust (Reit) sector is getting an update regarding best practice recommendations, to make financial reporting of Reits clearer and more comparable, while bringing the listed property sector on par with Reit structures around the world.
The South African Real Estate Investment Trust Association (SA Reit) has led the charge to introduce internationally recognised Reit legislation to South Africa, working with the National Treasury, the South African Revenue Service and the JSE.
Since its inception in 2013, when Reit legislation was introduced in South Africa, one of SA Reit’s goals has been to strengthen the profile of the sector by making the financial statements of public real estate entities in the country clearer, more transparent and comparable across the sector.
To ensure a listed property structure that is uniform and well-understood both locally and internationally, the association published its first edition of the SA Reit Best Practice Recommendations (BPR) in 2016.
It is the accepted standard for reporting key metrics consistently, which makes the analysis and comparison of different SA Reits easier, the association said in a statement on Monday.
The introduction of the SA Reit BPR was driven by the sector as most of the metrics that Reits are measured by are not strictly governed by International Financial Reporting Standards. Therefore, the BPR is intended to reduce divergence in reporting implementation among sector counters.
SA Reit has resolved to revise and update its BPR with a more vigorous focus on consistency and transparency in the financial reporting of Reits.
SA Reit chairperson Izak Petersen said its members have expressed a growing concern that more needed to be done to ensure consistency in reporting and to address the perceived lack of transparency among several real estate counters.
“Our sector prizes the record of transparency and trust it has built overall, and the move to revise the SA Reit BPR reinforces this.”
SA Reit tax and JSE committee chairperson Bram Goossens noted that, because of the listed property sector’s significant investment offshore in the past three years, and other changes since the first BPR was published, the time is right to take the next step and issue more robust guidance for Reits.”
The BPR is an evolving document that is meant to reflect new accounting and regulatory issues, address issues raised by asset managers and integrate changes proposed by key industry stakeholders. SA Reit has embarked on a process of engagement with a view to revise this financial reporting guide.
Specific issues that will come under the spotlight as part of the revised BPR include standardising the distributable income statement and increased and clearer disclosure for all reporting metrics.