The general public will be able to purchase shares in Pakistan’s first real estate investment trust on Dec 14 and 15 ahead of its upcoming listing on the Pakistan Stock Exchange.
The company is selling 10 per cent of Globe Residency REIT to ordinary investors for Rs10 apiece, a formal term used for shares in the case of a real estate investment trust.
Real estate investment trusts (REITs) collect money from investors and deploy it in real estate projects. The feature designed to let small investors take exposure to an otherwise capital-intensive and illiquid real estate market is what they must list on the stock exchange within three years of inception.
The project is based on a close-ended scheme which has a life of 48 months. Globe Residency is an apartment project of 1,344 residential units located on the outskirts of Karachi, and will be built with the help of proceeds.
The general public is expected to purchase 10 percent of the shares in the real estate investment trust, but the shareholders of the parent company will purchase 85 percent of the units at the same price. The remaining 5 percent will be bought by real estate consultants, according to the director of the corporation.
The CEO of the sister company that is going to launch as a real estate investment trust said that debt and equity will contribute Rs.1.4 billion each.
A higher degree of transparency is offered by REITs because trustees control all assets, unlike developers. The real estate investment trusts sector remained inactive for nearly six years after the first transaction in 2015.
There were no transactions because of changes in the tax and regulatory regimes that discouraged investors from taking part in the special investment schemes. The State Bank of Pakistan, Federal Board of Revenue and the Securities and Exchange Commission of Pakistan stepped up a gear in the last year or so, making it attractive for investors to put money into the real estate sector.