Tuesday, 04 August 2020 08:38

SEC introduces a frame work for Real Estate Investment Trusts

The Securities and Exchange Commission of Sri Lanka (SEC) along with the other stakeholders have introduced a frame work for Real Estate Investment Trusts (REITs framework) in Sri Lanka

the proposed initiative provides real estate developers and owners to convert fully completed properties in to a REIT which will provide an avenue for the general public of Sri Lanka to make an investment and thereby benefit from any property value increases.

The Sri Lankan REITs structure has considered the local environment in which it is expected to operate and the SEC has brought in a regulatory framework that is best suited to the market.

The Rules that have been introduced by the SEC will be an extension of the current Unit Trust Code and the new Rules, which came into effect from 31st July 2020 is in the form of a Gazette Notification published by the SEC.

These Rules which are comprehensive, will govern the setting up of and the conduct of a Sri Lankan REIT. Specific provisions have been included for the verification of title and valuation of property that will form part of the assets of the REIT.

Amongst the requirements is the mandatory distribution of approximately 90% of income to the unit holders, which is currently not a requirement for any of the listed entities.


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