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New REIT rules could be out this semester

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Real estate investment trusts are new investment instruments that will enable the general public to have a stake in real property projects.

THE SECURITIES AND EXCHANGE COMMISSION (SEC) is confident it can issue the planned revised guidelines on real estate investment trusts (REIT) within this semester, a senior SEC official said last week.

SEC Commissioner Ephyro Louis B. Amatong said the corporate regulator has heeded the Department of Finance (DoF) and Bureau of Internal Revenue’s (BIR) requests to ensure that money raised through REITs will be reinvested in the country.

“The DoF and BIR are requesting us to see if we can provide assurance in the implementing rules that any funds raised by the development companies through the REIT, through the issuance of shares on REIT, will be reinvested in the Philippines,” Mr. Amatong said after the commission’s en banc meeting in Pasay City on Tuesday last week.

REITs are listed firms that own and operate income-generating real estate assets like offices, apartment buildings, hotels, warehouses, shopping centers, and highways.

Congress passed Republic Act. No. 9856 — the REIT law — back in 2009, but taxation issues have dissuaded companies from offering this investment vehicle.

With the 12% tax on transfer of real properties removed under RA 10963, or Tax Reform for Acceleration and Inclusion Act that took effect a year ago, and the SEC favoring a lower 33% minimum public ownership level for REITs from 40-67% under current rules, the chief concern now is DoF’s question on whether or not the funds will remain in the country.




Mr. Amatong said both the SEC and Philippine Stock Exchange (PSE) can suggest rules to ensure that such funds will remain in the Philippines. In the case of the PSE, Mr. Amatong said its disclosure system and existing monitoring system is capable of watching where fund-raising proceeds will be used. PSE President and Chief Executive Officer Ramon S. Monzon said last December that the bourse operator will work on releasing new guidelines that will address the DoF’s concern of keeping all such funds home. “We will both come out with revised rules in the REITs to keep all the funds here. They will also do their own rule change,” Mr. Monzon said, referring to the SEC.

“So if the private sector developers and the PSE and the SEC can come to alignment earlier, tingin namin, mapapabilis ang pag-release ng REIT and IRR (implementing rules and regulations), then revise new IRR that will provide comfort to BIR, DoF,” Mr. Amatong said.

“The target is definitely first half (of 2019)… We’re very confident na kaya ’yan (it can be done).”

Asked on interest in REITs this year, Mr. Amatong cited an application by one investment bank to be a REIT administrator.

Alam namin may (We know of one party that is) interested. I think it is a matter of record naman. I think it is ATR that has applied to be REIT administrator, may pending application na,” Mr. Amatong said, referring to Maybank ATR Kim Eng. — Arra B. Francia