This research report commissioned by APREA and sponsored by Perpetual Corporate Trust highlights the different ways in which REITs are regulated and taxed in the region, looking at REIT structures, nature of operations, capital management, investor reporting, alignment of interests, related party transactions and regulatory and taxation issues.
This is the first comprehensive report of regulatory and tax regimes of REITs in the Asia Pacific region.
The results are underpinned by an extensive survey of investors’ evaluation of how well these issues are addressed in various Asia Pacific REIT jurisdictions.
The survey identified many features of global REITs considered by investors to be important which are not necessarily present in Asian regimes, or not provided for sufficiently.
- The need for management that is local to a REIT’s country of operations
- A strong preference for gearing of 50% or less
- The need for the same capital management tools as operating companies (the lack of this feature put significant strain on many Asian REITs during the 2008 global financial crisis)
- No limitation on foreign ownership of REITs
- A strong preference for semi-annual or quarterly reporting against benchmarks
- A strong preference for semi-annual or annual independent market valuation of assets
- The importance of effective regulation of related party transactions (Australia, followed by Singapore, are seen as being the jurisdictions having the greatest level of market confidence and integrity in this respect)
- The need for a REIT to be a flow-through entity for tax purposes (there was unanimity in this respect amongst survey respondents)