REIT expected to finalize take off this year

MANILA, Philippines — Real estate investment trusts are expected to finally take off this year as the government relaxes rules of the existing decade old Real Estate Investment Trust Act.

Market participants said they could finally see REITs take off this year as the Duterte administration agreed to address previous conflicts on the implementing rules that has stalled REIT listings the past years.

BPI Securities president Haj Narvaez said in a yearender briefing for 2019 that REITs are expected to take centerstage this year with many companies already eager to participate in the REIT landscape.

The stock brokerage company is anticipating a more favorable outlook for the country with a Philippine Stock Exchange index target of 9,000.

The country’s oldest conglomerate Ayala Corp. through its property giant Ayala Land Inc. wants to be the first Philippine REIT to be listed this year. It had planned to list last year.

It already set up AyalaLand REIT Inc. to publicly list as a REIT even under the current implementing rules and regulations of the Securities and Exchange Commission on REITs and following the minimum public ownership requirement of 67 percent.

“ALI believes that the REIT initiative is a viable investment vehicle to access new investors, recycle and reinvest capital, and promote the development of the Philippine capital markets as a whole. While ALI intends to initially seed AREIT with prime, Grade-A commercial office assets in Makati, the offer structure, including terms and conditions thereof, are yet to be finalized. Disclosures shall be made in due course, consistent with applicable rules and regulations,” Ayala Corp. said in its latest quarterly report filed with the PSE.

DoubleDragon Properties Corp. chairman Edgar “Injap” Sia II likewise said the company intends to participate in the REIT landscape.

Century Properties Group, the listed property developer of the Antonio family, also said REITs would provide developers new capital to expand and develop new projects.

The Philippine Stock Exchange (PSE), the stock market operator, hopes to finally have the new implementing rules of the REIT this year.

The Securities and Exchange Commission, for its part, has already completed the final draft for the implementing rules of the Real Estate Investment Trust (REIT) Law which will reduce the minimum public ownership to 33 percent from 67 percent.

At present, the BIR Revenue Regulation on REIT puts the minimum public ownership at 67 percent for REITs to enjoy tax incentives.

SEC chairperson Emilio Aquino has said the proposed amendments align with the SEC’s mandate to promote the development of the capital market toward the democratization of wealth and broadening of participation in the ownership of enterprises.

“With the proposed amendments, we hope to develop a viable REIT market that will unlock a deep source of funding for more infrastructure projects in the country along with a lucrative investment opportunity for Filipinos,” Aquino said.