SA Reit chairperson Estienne de Klerk
Industry association SA Real Estate Investment Trust (SA Reit) on Wednesday published the second edition of its Best Practice Recommendations (BPR), which will take effect on January 1, 2020.
The new BPR replaces the first edition and now introduces an internationally recognised performance measure called SA Reit Funds from Operations per share, which will replace distributable earnings a share as the primary supplemental performance measure.
Additionally, the second edition of the BPR requires that non-International Financial Reporting Standards (IFRS) metrics no longer be applied as broad principles, but rather that step-by-step disclosure can easily be reconciled back to the reported IFRS accounts.
“As the accepted standard for the sector’s consistent reporting of key metrics, these updates will further reduce divergence in reporting implementation among sector counters. It will also enhance transparency and comparability of financial reporting by South African Reits,” says SA Reit chairperson Estienne de Klerk.
The SA Reit structure was introduced to South Africa in 2013 and the first SA Reit BPR guide was published in 2016.
A review of this guide began in August 2018, in response to advances in the internationalisation, corporatisation and governance of the sector. The SA Reit BPR is an evolving document that considers the latest accounting, regulation and reporting developments.
In a broad consultative process, the second edition BPR was finalised after four rounds of consultation, starting and ending with SA Reit members.
Importantly, the consultative process included the JSE and lengthy and detailed feedback from the Association of Savings and Investments South Africa, on behalf of its members, who are considered the custodians of the bulk of the nation's savings and investments and are among the country's biggest contributors to national gross domestic product.
They include most of the country's asset managers, collective investment scheme management companies, linked investment service providers, multi-managers and life insurance companies.