Real Estate Investment Trusts in South Africa
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Technically, there are no Real Estate Investment Trusts in South Africa. However, that country is included in the annual study of REITs around the world done by Ernst & Young, and it's included in a global REIT index.
This is because it does have some companies which, although not REITs in the full, ordinary sense of the term, are close enough to be included.
There are those in South Africa who want the country to pass legislation enable full Real Estate Investment Trusts in South Africa.
Portfolio Unit Trusts (PUTs) are the Equivalent of Real Estate Investment Trusts in South Africa
Meanwhile, there are Portfolio Unit Trusts (Put) that hold a portfolio of investment-grade properties and is listed on the JSE Limited (SA) in the Real Estate Sector.
They are governed by the Collective Investment Schemes Control Act No 45 ogf 2002 (Collective Investment Schemes Act).
PUTs are managed by a management company. They generally invest in shares of property companies. They can, but usually don't, invest directly in real estate properties.
The income they distribute to unit holders is not taxable, but any income they do not distribute is. But there are no minimum distribution requirements. The unit trust may choose to keep as much income as it's willing to pay taxes on.
A PUT cannot have more than 30% debt on the value of their underlying assets.
However, the appeal of REITs to ordinary income investors is the high dividends they are required to pay. Without a requirement to pay out large dividends, I cannot recommend Real Estate Investment Trusts in South Africa. Not they actually are that, and not Property Unit Trusts (PUTs).
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