General SENS Submitter Company - GEN General - JSE Limited - Real Estate Investment Trust Distributions

GEN – General - JSE Limited - Real Estate Investment Trust Distributions

GEN – General - JSE Limited

Real Estate Investment Trust Distributions

Introduction

We refer to the SENS announcement published on 26 May 2020 (the “Announcement”) wherein the JSE invited
public comments on certain matters pertaining to the challenges faced by the property industry. The objective
of the public consultation was to obtain input from all relevant stakeholders prior to making a determination on
the best possible way forward. Issuers in this sector had requested various forms of relief that included:

*       deferring the final date by which REITs are required to make their distributions; or
*       paying a limited or no distribution at all.

The Announcement also referred to the SA REIT Association’s request to National Treasury to provide certain
relief during this COVID 19 pandemic, including dealing with the implications of potential non-payment of
distributions.

Powers of the JSE

The JSE is a licensed exchange pursuant to the provisions of the Financial Markets Act No.19 of 2012 (the “FMA”)
and its regulatory duties and functions are narrowly circumscribed by the peremptory provisions of the FMA. In
accordance with the FMA, the JSE is obliged to make listings requirements and enforce it. The JSE derives its
powers from the provisions of the FMA and it does not afford the JSE with the power to exempt issuers from
complying with important obligations as set out in the JSE Listings Requirements (the “Requirements”) nor does
the FMA allow the JSE to unilaterally amend the Requirements.

The Announcement stipulated that it is not within the ambit of the JSE’s regulatory powers to compel the board
of directors of an issuer to make a distribution. It is incumbent on the issuer, acting through its board, to decide
whether a distribution should be made. The JSE is only in a position to deal with the consequences of the board’s
decision. The Requirements state that an issuer that fails to make a distribution (other than where it is unable
to make the distribution due to the solvency and liquidity requirements in terms of the Companies Act No 71.
Of 2008) will no longer qualify to be classified as a REIT.

Outcome

Following the request from issuers, the feedback from the public consultation process and taking into account
the JSE’s powers, the JSE engaged the Financial Services Conduct Authority (“FSCA”). This engagement by the
JSE led to the provision of interim relief by the FSCA that allowed REITs, with year ends from February to
September 2020, to postpone the payment of their dividends for a two-month period. The JSE continued to
engage with the relevant parties to ascertain what, if any, further relief could be provided.

Revised approach from the SA REITs Association

The SA REIT’s Association recently submitted a further request to the JSE wherein similar relief was sought but
which was decoupled from any potential tax relief. The JSE again engaged with the FSCA, which culminated in a
request to the SA REITs Association to put forward a proposal for consideration wherein the boards and
management of REITs also agree to similar waivers of their bonuses over the same period to align with the
impact on investors. Unfortunately, agreement could not be reached on this request and the FSCA has
accordingly advised that they are not in a position to consent to the request put to them by the JSE.
Conclusion

This outcome requires those REITs who had delayed their distribution decisions pending the outcome of this
process must now communicate further with their shareholders.

22 September 2020

Date: 22-09-2020 03:21:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.