SEC completes REIT rules draft

Published November 30, 2019, 12:00 AM

by manilabulletin_admin

By James A. Loyola

The Securities and Exchange Commission (SEC)has completed the final draft for the implementing rules of the Real Estate Investment Trust (REIT) Law which will reduce the minimum public ownership to 33 percent from 67 percent.

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In an interview, SEC Associate Commissioner Ephyro Luis B. Amatong said they are now coordinating with the Philippine Stock Exchange and Bureau of Internal Revenue, through the Department of Finance, to align their provisions on the minimum public float of REITs.

“The current BIR Revenue Regulation puts the minimum public ownership at 67 percent for REITs to enjoy tax incentives. This will have to be reduced to 33 percent to match our own rules,” said Amatong adding that the PSE’s listing rules will also have to reflect this change.

While many real estate companies are interested in forming real estate investment trusts from their mature leasing assets for public listing, they have balked at the 67 percent minimum public ownership rule.

Amatong said earlier the SEC is bringing down the minimum public ownership to 33 percent upon initial listing but this should be raised to two-thirds or 67 percent ownership in three years.

He added that the SEC will require that the proceeds of the REIT should be reinvested in the Philippines, either in property or infrastructure, within one year.

While the implementation of the REIT Law has been pushed back several times due the drafting of implementing rules that will make it attractive to property companies, Amatong said that he is hopeful they this will be finished soon as they are in contact with the DOF, BIR and PSE.

The REIT Law was enacted on 2009, under the Arroyo administration, with the main aim of broadening the participation of the public in the ownership of real estate in the Philippines and use the capital market as an instrument to help finance and develop infrastructure projects.

However, the earlier implementing rules and regulations included measures on public float and taxing the transfer of assets which soured the deal for many of the players.