• Real Estate Investments Zambia Plc (REIZ) to attain REIT status
  • REITs allow access to wider pool of potential investors
  • Attaining REIT status aligns with company's commitment to transparency and governance

Sandton- Real Estate Investments Zambia Plc (REIZ), a listed company primarily involved in investment, development, and restructuring of commercial and non-commercial property for letting, has announced its intention to attain Real Estate Investment Trust (REIT) status. The company plans to file an application with the Securities Exchange Commission (SEC) and comply with the requirements set out in Sections 3 and 13 of the Listing Rules.

REITs are a form of collective investment scheme that own, operate, or finance income-generating real estate properties. They are unique investment vehicles that allow individuals to invest in a diversified portfolio of income-generating real estate assets. REITs are subject to stringent regulatory requirements, including financial reporting standards and independent audits.

By attaining REIT status, REIZ will be able to access a wider pool of potential investors, including institutional funds, pension funds, foreign, and individual investors seeking exposure to real estate assets. This will provide REIZ with increased liquidity and the ability to raise capital at a more competitive cost, thus supporting the company's growth and facilitating future acquisitions.

In terms of benefits, as a REIT, REIZ will be required to distribute at least 75% of its distributed income as dividends to shareholders. This will result in the company offering regular and consistent income streams, making it an attractive option for investors seeking passive income. Additionally, the company intends to have the REIT listed and traded in United States Dollars over the Lusaka Securities Exchange (LuSE). This will attract foreign investments and provide access to international capital, leading to capital gains that will enhance value for shareholders.

Converting to a REIT status is in line with the company's commitment to transparency and corporate governance. It will enhance the trust and confidence that shareholders and potential investors place in the company's operations. Furthermore, by attaining REIT status, REIZ will enjoy preferential tax treatment since REITs are exempted from corporate taxes. This will further enhance the potential returns for all REIZ shareholders.

An Extraordinary General Meeting will be announced at a later date, where shareholders will have an opportunity to vote on this transaction. Shareholders are advised to continue to exercise caution when dealing in the company's securities until the completion of the transaction.

The conversion of REIZ to a REIT status is expected to provide increased liquidity, access to a wider pool of investors, and enhanced transparency and corporate governance. Furthermore, by attaining REIT status, REIZ will enjoy preferential tax treatment, provide regular and consistent income streams to investors, and potentially offer capital gains.

Neighbouring Zimbabwe has seen a surge in the listing of Real Estate Investment Trusts (REITs) in recent years, with Tigere Property Fund being the only listed REIT on the Zimbabwe Stock Exchange as of July 2023. Zimbabwe's Ministry of Finance and Economic Development has pledged its support towards the growth of REITs in the country through the implementation of different regulatory frameworks that promote its expansion. This move is aimed at deepening capital markets through diversification of financial instruments available to investors, improving financial inclusion, mobilizing resources for infrastructure development, and hedging against inflation. Tigere Property Fund expects an uptick in US dollar revenue for its shareholders in dividends as revenue exposure in foreign currency is now above 80 percent, and the government is determined to support the expansion of the country's REIT market through various initiatives. A stakeholders' indaba on REITs was also held in Zimbabwe, bringing together industry leaders to discuss the potential of REITs in the country's real estate sector.

-Equity Axis News