The Securities and Exchange Commission has expressed interest to reduce the minimum public float requirement for real estate investment trust companies to 33 percent to attract issuers.
SEC chairman Teresita Herbosa said the lower public float requirement would be possible if REIT issuers showed that they deserved the incentives.
“I am willing to put it [public float at] 33 percent and let the market determine what eventually will be the public ownership because that depends on the people,” Herbosa said.
“But they [REIT issuers] would have to show the government that they are entitled to that preferential tax exemption and to show in return, what they can give back to the domestic economy,” Herbosa said.
REITs are companies that own revenue-generating property assets such as hotels, office buildings and malls and whose shares will be listed and traded on the PSE. Public investors that will buy these shares will earn from them through dividends.
The REIT law was passed in 2009, but there were no issuers yet because of unattractive features, such as the 67-percent minimum public float requirement after the third year of listing and imposition of the 12-percent value added tax on the transfer of assets to REITs.
About $3 billion worth of capital raising activities from REIT, mostly from real estate firms, were put on hold because of these barriers.
Herbosa said SEC ordered its market securities and regulations department to come up with a study on what would be the attractive minimum public float requirement for REIT companies.
SEC is also set to conduct an REIT forum to get the commitments of future REIT issuers.
“I think it was Secretary Dominguez who said that we should engage the future REIT issuers. That we should probably sit down with them and ask them how serious are you to go to REIT projects, list them in the stock exchange, and have people invest. What are the chances of this IPOs or these REITS being successful. I think it’s the better procedure,” Herbosa said.
Philippine Stock Exchange president Hans Sicat earlier said the easiest way for the Duterte administration to re-launch REIT is to revoke the revenue regulation issued by the Bureau of Internal Revenue that imposed 12-percent VAT on the transfer of assets to REIT firms and memorandum circular issued by SEC requiring a multi-year increase in public float of REITs beyond the 33 percent minimum requirement prescribed by the original implement rules and regulations of the REIT law.