Developers wishing to list REITs at DSE need 500m/- capital

11Mar 2016
Finnigan wa Simbeye
The Guardian
Developers wishing to list REITs at DSE need 500m/- capital

REAL estate developers who want to raise money through Real Estate Investment Trusts (REITS) at Dar es Salaam Stock Exchange (DSE) need to have 500m/- as initial capital.

Moremi Marwa

DSE Chief Executive Officer, Moremi Marwa dismissed allegations that the minimum capital required is 10bn/-.

“Did anyone tell you the regulation behind the 10bn/- that they are referring to?” Marwa wondered saying there is not such a thing in any of the stock market and Capital Markets and securities Authority legislation.

“As far as DSE rules are concerned, there has never been a 10bn/- capital requirement as a pre-condition for listing.

We have a minimum of 200m/- of capital raising via initial public offer (IPO) prior to listing into the Enterprise Growth Market and 500m/- for Main Market Segment,” Marwa argued.

The DSE chief further noted that CMSA legislation is very clear on REITs minimum capital requirements hence inviting developers to cross check facts with the stock market’s officials.

“Kindly read the CMSA Real Estate Investment Trusts Rules of 2011. In these rules, Section 87 (3) (a and b) specifically mentions that 500m/- as the minimum capital requirement for a REIT that intends to list into the DSE,” the DSE CEO stressed.

Developers have been escaping from using the REITS pointing out that the rules including minimum capital requirements are prohibitive.

A real estate advisor and marketing agent, Murtaza Adamjee of Global Land Solutions in Dar es Salaam said REITS have not attracted developers because of strict regulations including a 10bn/- minimum capital requirement.

“The rules are very strict, for example, I cannot mobilise people with small savings to jointly invest in single commercial property,” the GLS Chief Executive Officer noted saying authorities should review regulations to encourage real estate investors because the country is facing acute shortage of residential houses.

“The real estate industry in this country is in serious trouble, it’s difficult to raise capital from banks because interest rates are very high,” he argued saying even using mortgage financing people buying houses are burdened by hiked interest rates.

Meanwhile DSE has not approved Watumishi Housing Limited’s REIT. CEO Moremi Marwa said may be the instrument has been listed under private placement.

In its February edition newsletter, Centre for Affordable Housing Finance in Africa has focused on WHC’s REIT saying it is the first of its kind in East Africa.

“Watumishi Housing Company (WHC) is a public entity established in 2013. WHC is a property developer and a licensed fund manager for management of the WHC Real Estate,” the article reads in part.

The CAHFA newletter article further noted that WHC-REIT was licensed by Capital Market and Security Authority (CMSA) in 2015 and became the first fully-fledged REIT to be established in Tanzania and East Africa.

“As a property developer, WHC-REIT is the main implementer of the Tanzania Public Servant Housing Scheme tasked with building of 50,000 housing units in five phases commencing from 2014/2015 financial year,” the article added.

Houses shall be sold under mortgage arrangements to public servants and other eligible members of the public across Tanzania.

Investment in Real Estate Investment Trusts (REITs) is a new concept in Tanzania and yet it provides an immense opportunity for the general public to participate and create personal wealth as well as contribute towards overall economic development.

“WHC-REIT seeks to work with other national and international fund manager and other stakeholders to develop this market in a manner that is beneficial to all parties,” it stated.

The Public Service Pension Fund, Government Employees Provident Fund, PPF Pension Fund, LAPF Pension Fund, National Security Authority, National Health Insurance Fund, and the National Housing Corporation are the all stakeholders in the REIT, the CAHFA newletter article noted.