SEC open to dialogue on REIT law amendment

The Securities and Exchange Commission (SEC) is keen to have a dialogue with industry groups in order to set the ball rolling anew for the much anticipated amendment of Real Estate Investment Trust (REIT) law.

REIT is a closed-end investment company listed in the stock exchange and invests directly in real estate assets. What makes it ideal is that it has special tax considerations and high yields.

Six years after the enactment of the REIT act in the country, no one has yet participated in the scheme because of regulatory and tax issues.

SEC Commissioner Ephyro Luis Amatong said during the 4th Asia Pacific Real Estate Investment Summit that SEC intends to start a dialogue with institutions in order to make REIT a real option for companies who need to raise capital.

As of now, the local stakeholders are still hesitant to participate in REIT because of tax and public float issues, Philippine Stock Exchange chief operating officer Roel Refran said.

Under the law, the Bureau of Internal Revenue (BIR) imposed an additional cost of 12 percent for property owners who want to corporatize their income-generating assets into a REIT.

SEC, on the other hand, said the minimum public ownership of REITs should increase sharply from 33 percent to 67 percent in the third year after its listing.

“SEC hasn’t looked directly at REITs in particular but I would invite the industry to begin a discussion now with SEC. The reality is those two issues – public float and tax – and the risks are all interrelated. What the industry needs to understand is it is very difficult to balance that,” Amatong said.

“The product has not reached its full potential. We need dialogue in order to arrive into correct balance. Dialogue is the key term and balance is the key term. SEC is willing to sit down with the industry to get the thing going on. Everyone is waiting for this,” he further said.

Francisco Ed. Lim, senior partner at ACCRA Law, said that once the REIT law