SEC to review REIT implementing rules

MANILA, Philippines — The Securities and Exchange Commission (SEC) will do another round of review of the implementing rules for the Real Estate Investment Trust (REIT) Act.

The corporate regulator expected to issue the final implementing rules and regulations for the REIT Act early this year.

However, industry sources said Finance Secretary Carlos Dominguez is not yet satisfied with the draft rules. “The SEC still needs to fine tune the rules,” industry sources said.

Dominguez, sources said, wants to make sure the tax incentives that REIT participants would enjoy would be used properly.

He also wants to make sure that the funds raised from the REIT would stay in the country, sources said.

The Philippine Stock Exchange (PSE), the operator of the local bourse, has drafted new listing rules to ensure that funds raised from the REIT would indeed stay in the country as what Dominguez wants.

However, industry source said Dominguez wants to see the rules tightened further.

Earlier, an SEC official said the commission was hoping to issue the implementing rules and regulations for the REIT in the first quarter of the year.

Fund managers interested in managing the capital that would be recycled from the REIT are already seeking the approval of the SEC.

Likewise, some of the country’s biggest property are now keenly awaiting the final implementing rules to see if it would indeed be viable for their respective companies to participate in the REIT.

Congress passed the REIT Act in 2009 as it was deemed an important vehicle to generate more investments especially for real estate companies.

However, the implementation was stalled since that time because of tight taxation framework.

Thus, none of the major property developers participated with their prospective offerings amid issues on ownership and taxation on asset transfers.

For instance, the government subjected the transfer of assets into REITs to taxation and slapped a 12 percent rate on additional income generated.