Good news for those who are looking forward to investing in REIT! The government has now relaxed the requirements for REITs or the real estate investment trusts. The Philippines wants to entice the first REIT issuer after almost 11 years since it passed the REIT law. During REIT Act’s implementing rules and regulations event on January 20, the Securities and Exchange Commission (SEC) took the proposal made in the previous year to reduce the minimum public float from 40% to 33%. SEC is also requiring the reinvestment of proceeds to be acquired from the issuance to the country.
Catch me in my live training events! (quick plug)
The heart of why I do these seminars is I want to build a generation of Filipinos with the right foundation in stock investing. I want to bring smart investing to every Filipino around the world! If you would like to know more about how you could time the market check out the training below.
Stock Smarts Taiwan – February 15, 2020
Stock Smarts Manila: March 14, 15, 21, 22 & 28, 2020
Stock Smarts Singapore: May 16 – 17, 2020
Stock Smarts New Zealand: June 6 – 7, 2020
Stock Smarts London: April 18 – 19, 2020
Stock Smarts Sydney: April 11 – 12, 2020
During the event, SEC disclosed that the proceeds from REIT issuance should be reinvested back to the Philippines within a year from the collection of the proceeds. This is regardless it is in infrastructure or real estate sectors. Along with this, the Bureau of Internal Revenue (BIR) changed its regulations to cater to REITs. Those who will be registering as REITs may receive value-added tax exemptions and will not be put in escrow. Philippine Stock Exchange (PSE), on the other hand, amended its requirements for listing and disclosure related to REITs. The minimum paid-up capital is now P300 million while the annual dividends should be at least 90% of the distributable income. To add, REITs issuers need to file quarterly investment and final investment reports.
PSE added that REITs should only invest in real estate here in the country. But if offshore investments want to do it, it may do so through a special authority authorized by SEC. The government believes that this is a solution to the challenges faced by Philippine REIT. The changes are inclusive to ensure that the whole country can participate instead of those who are in Manila only. REIT issuances are meant to attract malls and apartment developers in the provinces too.
Some of the companies who showed their interests to issue REITs include Century Properties Group, Inc. Ayala Land, Inc. Megaworld Corp. and DoubleDragon Properties Corp. The issuance of REITs could take up to two months. The amendment for REIT ACT is to be published this week and after 15 days, it will start to take effect. The REIT Act or the Republic Act No. 9856 was enacted in 2009. But because of the tight rules imposed by the government, REIT issuances are not very well-known in the Philippines. Could the new changes attract the first-ever issuer of REITs in the country? Let’s see how it goes!