ZSE waives fees for REITs issuer

PHILLIMON MHLANGA

The Zimbabwe Stock Exchange (ZSE) will grant a waiver on listing related fees to the first two companies seeking to list Real Estate Investment Trusts (REITS) as the bourse rolls out incentives to attract issuers.

The waiver, announced by ZSE head of markets, Anymore Taruvinga at a REITs meeting held in the capital this week, comes as the bourse says it was ready to accept applications for REITs to commence trading.

This follows the creation of a regulatory framework including the Security and Exchange Act (Chapter 24:25), which gives the SECZ powers to regulate all investment activities funds on intermediaries including securities and the Collective Investment Schemes Act (Chapter 24:19) , which allows for registration of all investment vehicles.

A statutory instrument (SI) 240 of 2019 was also gazetted.

“To incentivise potential REITs issuers to list, ZSE will give a waiver on listing fees for the first two REITs issuers and a rebate of up to 30% on ZSE CSD levy for up to three years,” Taruvinga said.

The listing of REITs, which is an investment vehicle legally set up to pool funds from many investors for investment into real estate, is part of efforts by the ZSE to diversify local financial securities traded on the bourse.

REITs are securities that are publicly traded on stock exchanges the same way as equities.

Taruvinga said dividend distribution is mandatory and there is a higher dividend yield, which should attract investors.

“The issuer can issue units in lieu of cash to benefits. While dividends in the corporate world are not mandatory, it is mandatory for REITS. Besides the mandatory dividends, investors enjoy diversification. There is also increased liquidity for existing and new properties. Listed units can be traded in the secondary market,” Taruvinga said.

There are broad categories of REITS namely equity which derives income from rentals and mortgage which is the M-REIT. Investing in mortgage-backed securities and related assets generate revenue through interest income.

They are sector specific types of REITs.

REITs give investors the option to invest in real estate products such as residential REITS, which are apartments or office REITS (office parks), retail REITs (shopping malls, shops), and health care REITs (hospitals, retirement homes, nursing homes).

Other sector specific REITs are infrastructure REITs (road, power and water), development REITS (construction) and diversified REITS, which is a hybrid of all other REITs).

Issuers should comply with Section 331 to 334 of Statutory Instrument (SI) 134 of 2019.

They should also comply with the provisions of the Finance Act No.2 (2020).

Apart from that insuers should have at least 30% of the units held by the public unless a private placement has been done prior to the Initial Public Offer, which results in the free float requirement of 20%.