The South African Real Estate Investment Trust Association (SA Reit) has published a guide book on Best Practice Recommendations (BPR) in an effort to clarify on the financial reporting of South African real estate investment trusts (Reits).
The South African Reit legislation in 2013 listed the property sector in par with similar investments worldwide. This ensured consistency between the vehicle for monetizing and listing property assets in South Africa and Reit structures internationally thus making the sector more attractive for international investors.
SA Reit Association chairperson, Laurence Rapp, in a statement on Monday said that enhancing the financial reporting of the sector would result in greater transparency, consistency and comparability. He went on to emphasize on the significance of this as it will attract global flows of capital into the South African listed property sector.
SA Reit Association accounting and JSE committee chairperson Laurence Cohen added that legislation had been positive for the South African listed property sector and that publishing the first edition of the BPR was a sure sign in the sector’s commitment to providing a listed property structure that was uniform and comprehensive both locally and internationally.
Cohen explained that, while South African Reits were companies, they had particular nuances and ways of reporting that were unique to the sector. He gave an instance that while most companies measured performance by growth in headline earnings, the performance of a Reit was largely measured by growth in distribution per share.
The publication is paramount in guiding Reits in achieving best practice in disclosure and reporting standards. It is also an important resource for the sector’s stakeholders – investors, analysts, financiers, media and others to understand the sector overall, as well as the reporting of individual constituent counters,” said Cohen.
He however noted that some Reits would have to change the way they reported in some areas given this year’s representation of first-time compliance with the BPR,
“Notable changes to look out for are the reporting of cost-to-income ratios and the determination of revenue,” added Cohen.