The South African real estate investment trust (Reit) sector is to receive an update regarding best practice recommendations to ensure the financial reporting of Reits is clearer and more comparable, while bringing the listed property sector on a par with Reit structures around the world.
The South African Real Estate Investment Trust (SA Reit) Association has led the charge to introduce internationally recognised Reit legislation into 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 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 was the accepted standard for reporting key metrics consistently, which made the analysis and comparison of different local Reits easier, the association said in a statement.
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 says its members have expressed a growing concern that more needs 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 notes 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”.