The SA REIT Association has released the Third Edition of its Best Practice Recommendations (BPR) – framework that governs how each of its members measures and reports financial and operational performances.

The latest edition is the most substantive update to the framework since 2019 with renewed access by SA REITs of the equity capital markets while institutional underweight positions narrow towards a decade low as the sector’s total market capitalisation moves through the R350 billion mark.

Its launch also coincides with the SA REIT Association’s membership of the Global REIT Alliance, an international coalition that relaunched under its new name in late 2025. Members collectively represent companies that manage approximately 98% of the world’s some US$2 trillion in REIT market capitalisation.

SA REITs raised over R11.4 billion in fresh capital through heavily oversubscribed bookbuilds in 2025 with the average discount to Net Asset Value (NAV) having narrowed from negative levels to between 3% and 4%. The case for a sharper, more practical disclosure framework as rarely been clearer, says the SA REIT Association.

The third edition tightens and expands the previous framework in several material aspects:

SA REIT Funds from Operations (FFO) per share is formalised as the primary non-International Financial Reporting Standards (IFRS) performance measure, replacing distributable earnings per share. The new metric prescribes twenty-one specified reconciling adjustments to IFRS profit or loss, covering fair value adjustments, deferred tax movements, straight-lining lease adjustments, gains or losses on disposal, foreign exchange and hedging items, and non-recurring transactions. Company-specific adjustments remain permissible but must be clearly defined and reconciled. The intent is straightforward – an income return on invested capital that investors can read across the sector without manually investigating each set of accounts.

SA REIT NAV per share is recast as a tangible measure, adjusting reported NAV to fair value where the cost model has been applied, excluding goodwill and intangible assets and removing deferred tax that would only crystallise on the sale of an asset. The metric closely resembles Tangible NAV and aligns South African disclosure with the way international institutional investors read REIT balance sheets.

Cost-to-income ratios are standardised on both a gross and net basis, ending years of inconsistent presentation across the sector. The all-in weighted average cost of debt is reframed to capture the full economic cost of funding, incorporating the impact of interest rate derivatives, cross-currency interest rate swaps and amortised transaction costs imputed into the effective interest rate. The new framework explicitly accommodates the ongoing transition from the Johannesburg Interbank Average Rate (JIBAR) to the South African Rand Overnight Index Average (ZARONIA), recognising both as legitimate floating reference rates and providing the methodology to convert between compounding periods. Standardised Loan-to-Value (LTV) and Interest Cover Ratio (ICR) calculations are introduced, giving lenders, analysts and rating agencies a single, consistent basis for assessing financial risk.

The latest edition also formalises the recommendation that companies’ external auditors assure the accuracy, validity, and completeness of the BPR disclosures to the extent that the SA REIT BPR disclosures are considered pro-forma financial information in terms of the JSE’s listing requirement and must be complied in terms of the JSE listings requirements and the Guide on Pro-Forma Financial Information, issued by SAICA with an assurance report prepared by the company’s external auditors in terms of the ISAE 3420 may be required. Where the SA REIT BPR disclosures are sufficiently cross-referenced to the audited annual financial statements, a dispensation must be obtained from the JSE. The Third Edition is to be read alongside JSE Practice Note 4/2019.

“The objective with the Third Edition was clarity and credibility. We have tightened the supplemental performance measures so that investors and financiers can read across the sector without ambiguity. We have formalised the role of external assurance over the disclosures that matter most. The result is a framework that holds up to the scrutiny that institutional capital, both local and offshore, now applies,” says Leon Kok, chair of the SA REIT Association Accounting and JSE Committee and author of the Third Edition foreword.

“Comparability is the foundation on which capital is allocated. Global investors weighing South African real estate investment trusts against a roughly US$2 trillion global market need to read the numbers in the same language they apply elsewhere. The Third Edition closes that gap and reflects how seriously the South African sector approaches its responsibilities to international capital,” comments Joanne Solomon, CEO of the SA REIT Association.

The Third Edition introduces an entirely new section of standardised operating metrics that bring property-level economics into the same comparable framework. These include the renewal reversion rate (the percentage change between renewed and expired rentals per square metre), the renewal success rate by Gross Lettable Area (GLA), tenant retention rate calculated both by GLA and by Gross Monthly Rental (GMR), the Weighted Average Lease Escalation (WALE) and the Weighted Average Unexpired Lease Term (WAULT).

Like-for-like revenue and net operating income growth, the rent-to-turnover ratio, trading density per Trading Density Area (TDA) for retail properties and the tenant effort ratio (full cost of occupancy over turnover) complete the new operational lens.

The intent is to give investors and analysts a standardised bridge between accounting performance and the underlying property fundamentals that drive it. For a sector in which top-line earnings can be shaped by lease escalations, retention dynamics, vacancy movements and like-for-like growth, the new metrics give the operational picture the same definitional discipline that has long applied to the financial statements.

To support adoption, the SA REIT Association will host a dedicated Best Practice Recommendations Question and Answer (Q&A) webinar, allowing members, analysts, auditors, investors and other stakeholders to work through the practical application of the new edition with the team behind it.

The updated guide is effective for reporting periods commencing on or after the 1^st of January 2026 and is available for download from the SA REIT Association’s website.