JSE-listed EPP, Poland’s largest owner of shopping centres, has urged the Polish government to introduce REIT (real estate investment trust) legislation for the country.
Rafał Kwiatkowski, Chief Operating Officer of EPP, says, “The property sector is an excellent avenue for creating wealth and should be more open to investors in the country. It would be a great vehicle for people to invest their retirement savings.”
EPP already operates as a REIT in the retail commercial property sector. It has, however, been limited in terms of attracting investors due to the lack of this critical legislation.
By being quoted on the main board of the JSE in South Africa, EPP has witnessed the benefits of REIT legislation on a country first-hand. After South Africa’s property sector actively campaigned for it, SA REIT legislation became a reality in the country on 1 May 2013.
The SA REIT ensures the vehicle for the monetising and listing of property assets in South Africa is consistent with REIT structures internationally, making the sector more attractive for both local and international investors.
The South African listed property sector has seen market capitalisation soar over the past two decades, rising from roughly R6 billion in 2000 to R300 billion currently. Today there are 32 SA REITs for investors to choose from, including diversified, retail, residential, office and industrial, and speciality REITs. An increasing number of these now have property holdings in international markets.
Polish citizens can’t invest in REITs because there isn’t any legislation allowing for it. “This would be simple legislation for the government to pass and would have a positive effect on the economy, especially now that Poland has now been rated among most developed countries list on the S&P for a fully year and, like the rest of the world, will have to deal with economic fallout from trade wars and slowdowns in our neighbours’ economies,” points out Kwiatkowski.
Poland is still among the nations that are best poised to avoid negative growth or a recession. “While the Polish government has room to make adjustments in debt levels and is taking actions to stimulate consumer spending, there is some simple legislation that would have a very positive effect that it could do right now – REIT legislation,” says Kwiatkowski.
The REIT, simply put, is a way that everyday investors can invest in commercial real estate. When an investor buys shares in a REIT, they are getting small portions of real estate held in a portfolio managed by a corporation that is publicly traded. It allows investors to own a share in investment-grade properties on the same basis as if they had bought the properties directly with the added benefit of value created through active, professional management.
“As a Polish company we would like to be more accessible to the Polish investors,” says Kwiatkowski. “Looking at the massive benefits that REITs provide to both professional investment companies and private citizens across a nation, we have to wonder why we don’t already have this legislation.”