The Securities and Exchange Commission (SEC) is amending the implementing rules and regulations for real estate investment trusts (REIT) in a bid to expand allowable assets, extend reinvestment timelines and ease minimum public ownership requirements.
The SEC said the draft changes aim to unlock more capital for the real estate sector and support economic development by broadening the types of income-generating real estate that may comprise a REIT’s portfolio.
The proposed rules would allow REITs to directly or indirectly own qualifying assets through shareholdings in an unlisted special purpose vehicle wholly owned by the REIT and formed primarily to hold real estate.
The amendments would also include in the definition of income-generating real estate any properties with regular streams of income or predictable cash inflows from leases or similar arrangements. This means that rental properties tied to transportation, information and communications technology, and energy infrastructure; parking lots; buildings; malls; warehouses or storage facilities; immovable fixtures and machinery; and real rights such as usufruct, easements and registered leases may all qualify. The SEC said the change would effectively expand the number of companies that may meet REIT classification.
