SEC reviews REIT revival

MANILA, Philippines – The Securities and Exchange Commission (SEC) expects to come up with the proposed amendments to the Real Estate Investment Trust (REIT) Act within three months as the Duterte administration plans to revive the stalled measure.

“We have already started (the study) so we can promise within three months,” SEC chairperson Teresita Herbosa said.

She said the SEC is looking at the ideal public float and what other provisions in the law would be amended to make the legislation more effective.

REIT is an investment option with huge potential but was stalled by tight taxation framework.

Companies that own and operate income-generating real estate assets are considered REIT companies. These companies include offices, apartment buildings, hotels, warehouses, shopping centers and highways.

It provides investors regular income and long-term capital appreciation like mutual funds.

Finance Secretary Carlos Dominguez said the new administration is looking at reviving the REIT.

Property developers welcomed the Duterte government’s pronouncements on REIT.

Kingson Sian, executive director of Megaworld, said it is a positive move.

“They are looking at amending the REIT Act. That would unleash a lot of capital in this sector. We are very positive of  the government’s vision,” Sian said.

In December 2009, Congress passed the REIT Act but its implementation has been put on hold because fiscal authorities and the SEC failed to agree on how to divide the ownership between real estate companies and the public.

Incentives under the REIT Act were expected to translate to losses of P10 billion for the government, according to the previous administration.

According to the position of the Finance department then led by Cesar Purisima, REIT companies must float at least 51 percent of the shares to the public to avail of tax incentives and other perks.

The local equities market, on the other hand, preferred 33 percent. After months of standoff, the government and the private sector reached a compromise deal requiring a minimum public float of 40 percent that will increase to 67 percent within three years after listing of the REIT companies.

However, no REIT companies have listed in the local bourse given restrictive tax rules.

Several property giants have earlier expressed interest in REIT ventures, among them SM Prime Holdings Inc., Ayala Land Inc. and Robinsons Land Corp.

The Philippine Stock Exchange (PSE) has been pushing for the revival of the REIT, saying that it could unleash new investments front for the private sector.

PSE president Hans Sicat has said there were $3 billion worth of investments that were ready to kick off under the REIT and that the Philippines could maximize liquidity and create a deeper capital market with REIT.