SEC to issue REIT IRR in next few months

MANILA, Philippines — The Securities and Exchange Commission (SEC) expects to issue in the coming months the final implementing rules and regulations for the real estate investment trust (REIT) Act, a ranking official said.

“We expect to issue it within the first half of the year,” SEC commissioner Ephyro Luis Amatong said in an interview on the sidelines of the Bangko Sentral ng Pilipinas’ Annual Reception for the Banking Community last week.

Amatong said the SEC may even try to issue the final IRR within the first quarter.

“If it’s possible to release the IRR in the first quarter, then we will,” Amatong said.

Fund managers interested in managing the capital that would be recycled from the REIT are already seeking the approval of the SEC.

Likewise, some of the country’s biggest property developers are now keenly awaiting the final IRR to see if it would indeed be viable for their respective companies to participate in the REIT.

Among these companies are Megaworld Corp., Ayala Land Inc., Robinsons Land Corp., and DoubleDragon Properties Corp. 

Congress passed the REIT Act in 2009 as it was deemed an important vehicle to generate more investments, especially for real estate companies.

However, the implementation was stalled since 2009 because of tight taxation framework.

Thus, none of the major property developers participated with their prospective offerings amid issues on ownership and taxation on asset transfers.

For instance, the government subjected the transfer of assets into REITs to taxation and slapped a 12 percent rate on additional income generated. 

It also set the minimum public ownership of such trusts at 40 percent for the first two years of their listing and 67 percent thereafter.

Under the Duterte administration, however, the SEC has agreed to cut REITs’ minimum public ownership to 33 percent and the Bureau of Internal Revenue has clarified that initial transfers of property to REITs are exempt from VAT as provided by Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act.

Thus, corporate regulators will amend the existing IRR.

Philippine Stock Exchange president and CEO Ramon Monzon, for his part, said the PSE hopes to issue its final guidelines on REIT within the first half.

He is optimistic that there would soon be a lot of REIT listings after the government already resolved the major stumbling blocks to the REIT implementation.

PSE chairman Jose Pardo added that REIT listings would definitely help improve liquidity in the market especially now that the local bourse needs more volume.