Real Estate Investor Magazine South Africa July/August 2019 | Page 46

REITS
REITS
An informative
overview
BY ISHANI CHETTY
A
REIT or Real Estate Investment Trust is a company which owns and in many cases
operates income-producing property. It can be understood as a listed property
investment vehicle in South Africa. According to SA REIT, both company or
trust REITs must be publicly traded on the JSE REIT board and qualify for the REIT tax
dispensation. REITs is a global concept used and implemented in more than 25 countries
across the world, with some utilising a similar REIT model such as Australia, Belgium,
France, the UK and more. A listed REIT must comply with various conditions in order to
be listed as a ‘JSE-listed REIT’.
WHY INVEST IN REITS?
Investment in SA REITs can produce a stable growing income return over a long period of
time. Anyone is eligible to invest in REITs as it can grow ones initial investment. It is a useful
tool to act as pension or retirement funds, mutual funds, unit trusts, family savings via trusts
or other investment vehicle and for individuals.
SA REIT provides insight into the minimum investment amount in REITs for potential
investors. “The JSE says that the minimum investment in a SA REIT is one share. Depending
on the SA REIT, this could then be below R100.”
Investments or purchasing of shares can directly be made in the SA REIT, either through a
securities account, collective investment scheme (a Unit Trust) or a Retirement Annuity which
invests in SA REITs. Shareholders of a SA REIT company will not liable to pay Securities Transfer
Tax (STT) when they purchase or sell SA REIT shares.
SA REIT says that although South African investors receive gross distributions from a SA
REIT without the 15% dividends tax levied against the distribution, there will be other tax
payments. “But investors will have to pay tax on the distributions at their applicable marginal
income tax rate when they include it in their taxable income.”
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JULY/AUGUST 2019 SA Real Estate Investor Magazine