By Arra B. Francia
THE Securities and Exchange Commission (SEC) said it can release guidelines on the issuance of real estate investment trusts (REITs) as early as July, without changing the minimum public ownership (MPO) requirement.
The commission is set to conduct another round of public discussions this month to finalize the qualification requirements of a REIT fund manager, which is one of three provisions that has dissuaded property players from issuing such a product.
“Kung wala masyadong tanong on the rules… by July finalize na (If there are not many questions on the rules… by July, we can finalize it),” SEC Commissioner Ephyro Luis Amatong told BusinessWorld on the sidelines of the 3rd Asia Pacific REIT Investment Summit in Parañaque on Tuesday.
Mr. Amatong said there is a pending issue regarding how much interest a fund manager can have in a REIT. The fund manager is tasked to implement the investment strategies of the REIT, oversee and coordinate its property acquisition, leasing, and operational and financial reporting, among others.
Rule 6 of the Implementing Rules and Regulations of Republic Act No. 9856 or the REIT law states that a fund manager must be independent of the REIT, its promoters, or sponsors.
“Nakalagay sa batas ay independent, but I think what it really meant was external, na yung fund manager ay hiwalay from the REIT…so pwede naman palang may ownership stake yung REIT or yung sponsor in the property (Under the law, it says the fund manager should be independent, but I think it meant that it should be separate from the REIT… So it can have an ownership stake, the REIT or the sponsor in the property),” Mr. Amatong explained.
However, the rules that are being readied by July will still include the 40-67% MPO for REIT vehicles, against the 33% requirement that property players have said is the ideal public ownership level.
Mr. Amatong said the SEC decided to iron out the rule on REIT fund managers first since it was a concern for all industry players, whereas some companies are already comfortable with the existing MPO requirement.
“Ang lumalabas, may mga willing to comply with the MPO. Pero the issue of the property manager, issue siya for all. So inuna namin kasi applicable to all, lahat gusto may stake sila in the property manager or the fund manager (It turns out, there are some who are willing to comply with the MPO. But the issue on the property manager, it’s an issue for all. So we prioritized that, everyone wants to have a stake in the property manager or fund manager),” he said.
With the amendment for the rule on REIT fund managers, Mr. Amatong is optimistic that the country will see the first REIT issuance this year.
Ayala Land, Inc. (ALI) said last April that it is preparing a REIT offering where it could raise about P25-26 billion within the year. This comes a decade after the REIT law was enacted in 2009.
Mr. Amatong also said that “about one or two” companies have already expressed interest that in conducting a REIT offering with the current MPO requirement.
Aside from issues on the REIT fund manager and high MPO requirement, property players were previously concerned with the 12% tax on the transfer of real properties once they place their assets in a REIT. This rule however has been removed following the passage of the Tax Reform for Acceleration and Inclusion Act last year.