The government is set to finally sign today the much-anticipated revised rules on real estate investment trusts (REITS), a move that will unlock billions worth of new capital and further spur the real estate industry.
The Securities and Exchange Commission, Bureau of Internal Revenue, Department of Finance and the Philippine Stock Exchange are scheduled to conduct a joint signing ceremony on the amendments to the implementing rules and regulations of the REIT Law this afternoon.
The meeting is expected to be attended by Finance Secretary Carlos Dominguez III, BIR Commissioner Caesar Dulay, SEC chairman Emilio Aquino and PSE president and chief executive Ramon Monzon.
One of the expected revisions in the implement rules of the REIT law is the lower minimum public ownership.
The SEC earlier said it was willing to reduce the minimum public ownership to 33 percent from current version of 40 percent in first year and 67 percent in the second year.
The higher public float requirement was one of the reasons why real estate investors shied away from the REITs for nearly 11 years after it was passed into law.
In exchange for lower public float requirement, the DOF wants capital to be raised from REITs offering reinvested in the domestic economy.
Another unfavorable provision of the previous REIT rules was the transfer of real estate assets to a REIT vehicle, which was subject to the value added tax.
This taxation issues were resolved with the passage of package 1 of Tax Reform for Acceleration and Inclusion Act.
Among the companies that have expressed plans to conduct REIT offerings are Ayala Land Inc., Double Dragon Properties Inc., SM Prime Holdings Inc., Robinsons Land Corp., Century Properties Group and Megaworld Corp.
Ayala Land last year announced plans raise $300 million in the country’s first real estate investment trust listing.
The REIT law allows real estate companies to sell through an initial public offering shares of real-estate trusts that hold assets, like shopping malls and office buildings. Since these assets generate a steady stream of income, they will pay regular dividends to shareholders.
Aside from being a new investment product for investors, the REIT could also boost liquidity in the local stock market.