Plan to revisit REIT law excites local developers

CEBU, Philippines - The plan to review and implement the Real Estate Investment Trust Law excites local developers as it is seen to further activate the market.

Finance Secretary Carlos Dominguez said in a report that the new administration wants to “change the thinking that a reduction in revenue is the way it should be interpreted rather than encourage business activities that would in fact result in more economic activities where you can recover the foregone revenues anyway.”

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

Dominguez said that they will have to review the REIT’s implementing rules and regulations that imposes strict conditions on firms in order to be entitled to tax perks than those provided in the law (Republic Act 9856).

Developer Jose R. Soberano III said that the REIT is seen to become the sector's "game changer" as it is expected to reinforce the long-term positive outlook of the Philippine real estate sector.

Soberano, whose company Cebu Landmasters Inc., (CLI), likewise agreed that re-visiting the REIT proposal will help the industry raise standards and expectations among players and buyers.

   Dominguez said that among the provisions to be scrapped is the one that says “over a three-year period, the REIT should raise its public ownership to at least 66 percent,” when RA 9856 merely imposes a 33 percent public float requirement.

The REIT Law was enacted in 2009 and recently, the Securities and Exchange Commission (SEC) expects to come up with the proposed amendments within three months as the Duterte administration plans to revive the stalled measure.

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.

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.

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

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.

According to Soberano the current administration's interest to revive the REIT excites developers like him. (FREEMAN)