Mauritius, known for its economic success and conducive investment environment, offers unique advantages for setting up REITs. The country’s robust institutions, favourable investment climate, and strategic location make it an attractive destination for REITs seeking growth and stability.
REITs in Mauritius operate similarly to REITs in other countries. A REIT is a company that owns, operates, or finances income-generating real estate properties. These companies pool capital from multiple investors, allowing individuals to earn dividends from real estate investments without directly managing the properties themselves.
A REIT in Mauritius must appoint a CIS manager who ensures proper management of the real estate assets. The CIS manager must have the necessary resources, infrastructure, and expertise to effectively discharge its duties related to the REIT.
Investment Restrictions and Practices
REITs in Mauritius are mainly regulated by the Financial Services Act 2007, Securities Act 2005 and the Securities (Real Estate Investment Trusts) Rules 2021. These rules and regulations outline permissible investments for REITs, including real estate assets, real estate-related assets, government securities, and cash equivalents. Additionally, a REIT must be listed on the Stock Exchange in Mauritius (primary or secondary listing allowed) within six months of authorisation to operate. If a REIT fails to secure listing in Mauritius within the specified period, it must refund all funds raised from investors and surrender its authorisation to the FSC.
The minimum investment required to set up a REIT in Mauritius is specified in the Securities (Real Estate Investment Trusts) Rules 2021. The prospectus of the REIT must specify that the REIT shall receive a minimum amount of subscriptions of at least 90% of the total amount to be raised from investors to begin operating the REIT.
Therefore, to establish a REIT in Mauritius, it is necessary to ensure that at least 90% of the total amount intended to be raised from investors is subscribed before commencing operations. This requirement aims to ensure that the REIT has sufficient capital to initiate its activities and fulfil its investment objectives.
Process for listing a REIT on an Official Exchange in Mauritius
The process for listing a REIT on an Official Exchange in Mauritius involves several steps and requirements to ensure compliance with regulatory frameworks and transparency in the financial market. Here is an overview of the listing process based on the Securities (Real Estate Investment Trusts) Rules 2021:
- Authorisation as a REIT: Before listing on an Official Exchange, a REIT must first be duly authorised to operate as a REIT by the FSC in Mauritius.
- Raising Funds: A REIT can raise funds from investors prior to being listed on an Official Exchange. However the funds raised following authorisation as a REIT cannot be used for investment until the REIT is official listed.
- Listing Requirement: A REIT must be listed on an Official Exchange in Mauritius within six months of being authorised to operate as a REIT by the FSC. Failure to secure listing within this timeframe requires refunding all funds paid by investors into the REIT and surrendering the authorisation to the FSC.
- Listing Documentation: The REIT needs to submit various documents to the Exchange for listing, including:
- application form
- listing agreement
- offer document, prospectus
- resolution passed by the cis manager approving listing of units of the REIT
- material contracts and documents like trust deed and investment management agreement.
- Additional information as requested by the Exchange
- Listing Considerations: The Exchange has discretion regarding the listing of units and may apply additional criteria in cases it deems listing inadvisable or unwarranted. The Exchange may request additional information to substantiate the eligibility of the REIT’s units for listing.
- Continuous Obligations: Following listing, the CIS manager of the REIT must disclose to the Exchange any information of which it becomes aware and this includes financial results and any price-sensitive information.
Benefits of listing a REIT on a Mauritius Official Exchange compared to other countries
Listing a REIT on an Official Exchange in Mauritius offers unique advantages compared to other countries, enhancing the attractiveness and competitiveness of REITs in the Mauritian financial market. Here are the key advantages:
- Tax Benefits: Mauritius offers a favourable tax environment for REITs, providing exemptions or reduced tax rates on certain income streams. This tax-efficient structure can enhance the returns for investors and contribute to the overall competitiveness of Mauritian REITs compared to those listed in other jurisdictions.
- Regulatory Framework: The Securities (Real Estate Investment Trusts) Rules 2021 in Mauritius provide a comprehensive regulatory framework for REITs, ensuring transparency, investor protection, and compliance with international standards. This robust regulatory environment instils confidence in investors and promotes the growth of REITs in Mauritius.
- Strategic Location: Mauritius serves as a strategic gateway between Africa, Asia, and the rest of the world, offering access to diverse markets and investment opportunities. Listing a REIT in Mauritius can attract global investors looking to diversify their portfolios and capitalise on the country’s strategic position.
- Investor Confidence: By listing on an Official Exchange in Mauritius, REITs demonstrate their commitment to transparency, compliance, and good governance practices. This commitment enhances investor confidence and trust in the REIT’s operations, leading to increased investor participation and support.
- Access to Capital: Listing a REIT in Mauritius provides access to capital markets, allowing the REIT to raise funds efficiently though equity offerings or debt issuances. This access to capital enables REITs to fund new projects, expand their real estate portfolios, and pursue growth opportunities.
Appointment of a valuer
Valuing a REIT involves analysing financial performance, market conditions, asset quality, and using metrics like net asset value (NAV) and funds from operations (FFO). The NAV is a key metric for assessing REITs as it determines the actual value of the REIT’s holdings by considering market value and subtracting debts like mortgage liabilities. This metric helps investors make informed decisions about investing in REITs based on accurate valuations of their real estate assets.
Every REIT established in Mauritius must hire an approved valuer from a recognised professional institution and registered with the International Valuation Standards Council. Such valuer must be independent and have no connections with the REIT’s governing body, promoter, custodian, CIS manager, substantial shareholder, or any other party that could influence their valuation. Additionally, the valuer or any related individuals cannot own shares in the REIT. The valuer is also not allowed to assess the same property for more than five consecutive financial years, and any new valuer must be approved by the FSC before being appointed.
