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  • Writer's pictureThe Kaplan Team

THOUGHT OF THE WEEK What is a reit?

Updated: Apr 7, 2020

REITs, or real estate investment trusts, are companies that own or finance income-producing real estate in a range of property sectors. These companies have to meet certain requirements to qualify as REITs. Most REITs trade on the major stock exchanges and own several kinds of commercial properties in SA, such as warehouses, factories, hospitals, shopping centres, office buildings and, to a lesser extent, residential properties. Some also invest in properties overseas.

A JSE-listed SA REIT must inter alia:

Own at least R300 million of property;

Keep its debt below 60% of its gross asset value;

Earn 75% of its income from rental or from property owned or investment income from indirect property ownership; and

Pay at least 75% of its taxable earnings available for distribution to its investors each year.

One advantage of REITs is that they are not subject to capital gains tax (CGT) on the disposal of immovable property, or shares in a ‘property company’.

For more information on the above, please contact our Professional Staff.

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This article is not intended to constitute legal advice and is produced for information purposes only and to provide a general understanding of the legal position relating to the topic. It is recommended that advice relating to the specific circumstances of your situation be sought from our attorneys before acting upon the content of this article. This article was written at a particular point in time and accordingly may not always reflect the most recent legal developments, if any, applicable to the relevant topic. Kaplan Blumberg and its partners and/or employees, are not responsible for any consequences which may follow upon any decision taken to act upon the information provided in this article.

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