Implementing rules on real estate investment trust ready for signing

THE government is set to sign today the amendments to the implementing rules and regulations (IRR) of the Real Estate Investment Trust (REIT) Act, which is expected to draw up REIT registrations from listed property firms.

The Securities and Exchange Commission (SEC) announced through a media invitation on Friday the joint signing ceremony for the REIT guidelines with the Department of Finance (DoF), Bureau of Internal Revenue (BIR) and the Philippine Stock Exchange, Inc. (PSE) today.

Republic Act No. 9856 or the REIT Act was released by the government in 2009 as part of “(promoting) the development of the capital market, …broadening the participation of Filipinos in the ownership of real estate…, (and using) the capital market as an instrument to help finance and develop infrastructure projects.”

While the REIT Act requires the publication of the IRR within 90 days from the law’s effectivity, disagreements on a number of its provisions such as the minimum public ownership requirement delayed the release of the guidelines by more than a decade.

In October last year, the SEC released its draft IRR which reduced the minimum public ownership requirement for REITs to 33% from the current 40% within one year and 67% within three years, and required all income generated from REITs to be invested back to the Philippines.

But SEC Commissioner Ephyro Luis B. Amatong said in November that conflicting rules with the BIR is another thing that the SEC has to settle before the release of the IRR.

“Unless the BIR changes the revenue regulation to be in line with the proposed change in the SEC’s regulation lowering back the minimum public float requirement for a REIT to 33%, there will be potential confusion among issuers. SEC will be prescribing a lower threshold, and if the BIR does not amend its rules, the tax benefit will not come in unless we get 66%. So we’re coordinating with the Department of Finance in order to make sure that the regulations are aligned,” Mr. Amatong said then.

The release of the IRR is expected to result in REIT listings from private firms such as Ayala Land, Inc. and DoubleDragon Properties Corp. Other firms such as Megaworld Corp., Robinsons Land Corp. and Century Properties Group, Inc. have also expressed interest in REITs.

The PSE also sees the REIT rules as one of the growth drivers for the local bourse this year, in line with expectations of investment banking arm First Metro Investment Corp. and brokerages Philstocks Financial, Inc. and 2Tradeasia.com. —