Adrian Tănase, Director General of the Bucharest Stock Exchange: "REITs provide access to investment in assets such as office or commercial buildings"

REITs (Real Estate Investment Trusts) offer individuals access to investments in assets such as office, commercial or logistics buildings, Adrian Tănase, Director General of the Bucharest Stock Exchange (BVB), said yesterday during a debate on the environment of business about REITs, financial instruments that are not regulated in our country, but for which there is a legislative approach in this regard.

The real estate sector is very important for Romania's economy, but very weak represented at the stock exchange, said yesterday Adrian Tanase, the Director General of the Bucharest Stock Exchange (BVB), during a business environment debate about Real Estate Investment Trusts (REITs), financial instruments that are not regulated in our country, but for which there is a legislative approach in this regard.

Adrian Tănase said: "At the stock exchange, we have been discussing for a very long time the possibility of having REITs, which in the Romanian nomenclature will be called real estate investment companies. We are the supporters of this law and we hope it will be adopted as soon as possible. We want as many Romanians as possible to save their money in a fair way and for the Bucharest Stock Exchange to offer them opportunities in this regard. We explain to investors or potential investors that savings should be invested for the long term, in stocks and bonds. But, in portfolios we must also have a real estate asset, which brings diversification. On the other hand, the real estate sector is very important for Romania's economy, because it generates horizontal and vertical GDP, but very weak on the stock market".

The law that will regulate REITs in our country, initiated by Senator Cristian-Augustin Niculescu-Ţagârlaş, has passed the Senate and has chances to be debated in the Chamber of Deputies this very session, according to yesterday's statements of its initiator.

Adrian Tănase explained that, in essence, there are two methods by which an investor can expose himself to the real estate sector. "One is by purchasing shares of a real estate developer, and two such developers are listed on the BVB. Another is by buying assets to be rented out. For this method, I think the most effective tool would be REITs, which give access, through the stock market, to assets that are already producing, in a more liquid and transparent way. Also, in addition to the residential area, they give access to types of assets that we, as individuals, do not have access to, for example office, commercial or logistics buildings," said the BVB Director.

Adrian Tănase added: "The real estate sector must be present on the stock market in a way that simulates direct investment, and this is where the regulatory restrictions come from. There are two elements. One is related to the taxation framework of direct investment. For example, in the case of the purchase of an apartment from which we collect rent, we pay a flat personal income tax of about 8%. However, the investment through the stock exchange must be similar from a fiscal point of view to the direct investment in real estate. Then, through direct investment, rent collection is guaranteed, a guarantee that we must also have in the case of investing in REITs on the stock market. From these two elements, on the basis of which investment through the stock market should be similar to direct investment, emerges the regulatory framework for real estate investment companies. This means that the only charge for investing in a REIT is on the dividend received, and that the REIT must distribute almost all of the income received, which translates into the distribution of at least 90% of the profits earned."

The BVB director emphasized that Romanians are already investing in the real estate sector, which is the second most preferred asset after bank deposits. "Through this law we can make such investments more efficient and transparent. We also allow institutional investors to take exposure to this sector in a very efficient way through the capital market. There is a lot of money in the system, billions of euros available for such investments. We can introduce this chain of capital transmission, which will be very beneficial for the real estate sector. This is because, when there will be the possibility of exit from a project through the capital market and the development activities will work in a more efficient and transparent way", said Adrian Tănase.