The Securities and Exchange Commission (SEC) is seeking to encourage more industries to list their assets as real estate investment trusts (REITs) by expanding the list of income-generating assets that can qualify as REIT assets.

In an interview, SEC Chairman Francis Ed. Lim said the SEC is clearly defining what qualifies as an income-generating asset under the REIT Law “in order to minimize issues.”

“We are expanding the definition so that more companies will be able to lease,” he said explaining that, real estate assets are immovable properties and, therefore, by definition under the Civil Code, they are real property and, therefore, if they generate income on a regular basis, that's a ‘REITable’ asset.”

“So we should give examples (in the list). For example, the power plants and cell towers can be characterized as real estate. They are under the law, considered immovable properties,” he added.

Lim also cited that, “electric towers attached to the ground, that's income-generating. That can be a REITable asset. Toll roads, although the company is not the owner, but it has a real right to operate the highway in that long piece of land, that's a REITable asset.”

Earlier, Lim said the SEC is revising the implementing rules and regulations of the REIT Law to expand the list of eligible assets, lengthen the reinvestment period, and attract broader participation.

He explained that they are considering extending the reinvestment period to maybe three years since the current rule provides that proceeds from the sale of REIT shares by its sponsoring real estate company must be reinvested within one year.

The SEC is also considering giving the selling sponsor more flexibility in where to reinvest the proceeds from the share sale, as the current rules limit these investments to infrastructure or real estate projects.