The Zimbabwe Stock Exchange (ZSE) has engaged the issuers who have shown interest in Real Estate Investment Trust (REITs) listing in an effort to mobilise resources for the infrastructure projects.
REIT is a regulated investment vehicle that enables the issuer to pool investors’ funds for the purpose of investing in real estate. In exchange the investors receive units in the trust and as beneficiaries of the trust share profits from the real estate assets.
REITs listings, which were introduced last year, were taking time to be listed as issuers wanted some regulations to be removed as they were not investor friendly.
ZSE chief executive Justin Bgoni told Business Times that nothing is holding the introduction of REITs but it is up to the issuer to then make a choice when to list. He said ZSE was also lobbying for the revision of the 50% participation limit for pension funds in the REITs.
“As the ZSE, we have engaged some issuers who have shown interest in listing, and we are also lobbying for the amendment of the current regulations to remove the perceived limitation of pension fund holdings in REITs,” Bgoni said.
Government, which launched a second stock exchange, last year in Victoria Falls, believes REITs would be successful on the bourse.
In his 2021 national budget, Finance and Economic Development minister Mthuli Ncube, proposed to exempt income accruing to REITs from corporate income tax.
This was in recognition of the capabilities of REITs to mobilise resources for new infrastructure projects and also incentivise investors into this alternative high yielding financial instrument.
According to a basic survey by the ZSE, there will be an increased uptake in Exchange Traded Funds and REITs in the near future.
The change and an improvement in the uptake are expected after the removal of the perceived limitation of pension fund holdings in REITs.
ZSE said the profile of investors in derivatives was likely to be dominated by the more sophisticated investors (institutions and foreign investors) on account of the complexity of the products and the higher risk.