REITs

APREA is working closely with several nations across Asia to either:

  • implement world class REIT frameworks; or,
  • modernise existing rules to an international standard.

APREA’s goal is to persuade governments to adopt a ‘state of the art’ REIT policy model that helps:

  • drive economic development and inclusive growth;
  • families build retirement savings and financial independence; and,
  • finance and deliver the social infrastructure (housing, healthcare, education) that underpins more 
    harmonious societies.

State of the ART REITs - what do they look like?

APREA has developed a ‘living framework’ for state of the art REITs.

That is, a framework that continues to evolve to meet the changing needs of society and the investment community.

Please click here to view APREA’s ‘state of the art’ REIT page.

India REITs

India’s first infrastructure trust IPO launched in May 2017. REIT IPOs are on the horizon.

APREA and its members played a seminal role in working with India’s regulators and policy-makers.

This included introducing officials to more than 23 APREA members in New York, Washington DC, Toronto and London.

We continue to do so.

APREA was also instrumented in persuading officials to scrap harmful CGT, MAT and DDT Taxes that would undermine the “flow through” structure of I-REITs.

We also provided advice on REIT/InvIT listing and valuation rules.

APREA and PwC have released a third edition of their seminal REIT and InvIT (Infrastructure trust) primer.

Campaign Summary

Secure real estate and infrastructure trusts that are ‘state of the art’.

Work with government regulators and officials to craft effective legislation and tax neutral rules.

Assist the regulator promote best practice management protocols.

Promote the existence of REITs and InvITs to investors and gatekeepers.

India Chapter Board

  • internal management option in addition to existing external management option
  • streamline capital allowance rules
  • dividend taxation rules
  • reduction of holding period rules for CGI
  • aligning treatment of SPVs and holding entities
  • definition of ‘equity oriented funds’ to include investment in units of business trusts
  • clarification of tax deduction rules

China REITs

APREA is working actively with several arms of the Chinese government to formalise a real asset securitisation marketplace in the PRC, including:

The Chinese government’s approach is to test alternative REIT frameworks by trailing ‘prototype’ REITs in different cities.

This is taking place in the midst of other ambitions policy modernisation program relevant to housing, urbanisation, infrastructure, financial markets and taxation.

The germinal C-REITs regime will also integrate with the new Asset Backed Securities Framework.

Campaign Summary

Secure a legislated code for listed real estate and infrastructure with tax neutrality.

Work closely regulators and relevant ministries to explore the REIT characteristics that meet China’s public policy priorities as well as the requirements of international capital markets.

Conduct the campaign with the China REITs Alliance and NAREIT.

Ensure the forthcoming securitisation platform can also address the PRC government’s housing and infrastructure priorities.

APREA Advocacy Roundtable and China chapter.

Philippines REITs

The Philippines passed REIT legislation in 2009

However, several executive orders undermined “the viability of a REIT market”. In particular, exorbitant taxes imposed on assets transferred into REITs and unnecessarily high minimum public offer requirements stopped the market stone dead.

APREA is working with the new Duterte administration to remove these barriers and modernise the P-REIT framework.

Campaign Summary

Introduce an UP-REIT style mechanism that minimises the cost of transferring assets into a REIT.

Re-instating the original public ownership rules and tax arrangements mandated by congress in 2009.

Work with government ministries, the SEC and Philippines Stock Exchange to seek executive order that modernise the P-REIT regime.

APREA Philippines Chapter Board

Hong Kong REITs

Hong Kong’s REIT legislation was last upgraded in 2014.

While measures to improve capital management tools and allow a minimal amount of development activity responded to APREA’s proposals, there is still much work required to modernise Hong Kong’s REIT regime.

In 2016, APREA conducted several very positive meetings with relevant regulators and government advisors. As a result, we are running a campaign to press for more broad ranging enhancement of the REIT code. The longer-term goal is to achieve tax neutrality.

Campaign Summary

Modernise the HK REIT to match the key elements of APREA’s ‘state of the art’ model.

Achieve tax neutrality.

Secure seamless fungibility with the PRC via the Shanghai and Shenzhen ‘connect’ mechanisms.

Engage the Finance ministry, Securities and Future Exchange, and Hong Kong Stock Exchange to agree a set of modernisation reforms to be considered by LegCo.

Work with allies, such as the Hong Kong Investment Funds Association to demonstrate a broad coalition for reform.

REIT Reform Working Party of the APREA Hong Kong Chapter Board

Japan REITs

The Japanese government has announced a new 2020 strategy to further boost its real estate sector.

The government’s objectives include doubling the market cap of J-REITs to ¥30 trillion (USD270 billion) by the end of the decade.

The strategy is part of Prime Minister Abe’s three arrows policy suite for re-energising and locking-in Japan’s long-term economic growth.

The Action Plan for the Growth of the Real Estate Investment Market comprises three main planks:

First, actively diversify the menu of assets that can be securitised, with a focus on healthcare, tourism facilities and infrastructure.

This program includes fostering international diversification.

The government also proposes to encourage REITs that invest in local regions, with an emphasis on meeting tourism demand.

Another key feature of the plan is to promote ESG-oriented investment opportunities.

 

The second plank of the action plan is to nurture corporate real estate renewal.

For the public sector, this means adopting more public-private financing techniques (PPPs/PFIs).

For the private sector, the priority is applying active capital recycling practices which help firms lighten their balance sheets.

Above all, the aim is to revitalise older stock and rejuvenate urban precincts, including local areas outside the big cities.

The third plank of the plan is to encourage a more investor-oriented industry.

This involves further improving transparency, promoting cross border investments informed by international standards and preparing “a guideline to evaluate performance of asset management companies” to assist pension funds.

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is driving the plan, which has been gestating for some time.

APREA is working with officials and ARES – The Association for Real Estate Securitisation.

Complementary REIT reform Initiatives

APREA is working with several other nations to assist with the development or fine-tuning of their REIT regimes.

A significantly improved and modernised REIT code is due to be promulgated in 2017.

In particular, the anticipated rules will offer a breakthrough in Sharia-compliant REIT formats.

APREA worked with the Malaysia government and local REIT managers to provide advice during review process.

The Indonesian government has announced several liberalisation measures. However, there is an opportunity to create a world-class REIT (including infrastructure) platform.

APREA is working with Jakarta Property Institute to present a persuasive case to modernise the DIRE (REIT) scheme.

APREA is in the early stages of recommending a major modernisation of Korea’s REIT code.

APREA is working with the Korean Association of Real Estate Investment Trusts.

APREA has commenced discussions on the scope of the major modernisation program.

APREA has been approached to recommend a program for upgrading Vietnam’s REIT framework.

APREA has offered advice to the Sri Lankan Securities Exchnage Commission in relation to REITs and collective investment scheme frameworks.

APREA is in direct contact with Abu Dhabi officials in charge of fostering an international quality REIT regime.

We are at early stages of engaging other Arab jurisdictions.