DOF approves draft IRR for REIT

MANILA, Philippines — There are no more stumbling blocks to the issuance of the new implementing rules and regulations (IRR) for the Real Estate Investment Trust (REIT) Act, industry sources said last week.

The Department of Finance (DOF) has already approved the draft IRR, sources said.

Thus, the Securities and Exchange Commission (SEC) is expected to release the IRR soon following the DOF’s approval. The SEC is an agency under the DOF.

Market participants are keenly waiting for the new rules.

Century Properties Group president and CEO Marco Antonio for instance said their group is eager to participate in the REIT, noting that it would help raise funding and long-term liquidity for property companies.

“REITs would be a great way to recycle capital and raise longterm funding,” Antonio said in a press conference on Friday.

The country’s oldest conglomerate Ayala Corp., through its property giant Ayala Land Inc., also wants to participate in the REIT and is aiming to be the first Philippine REIT to be listed in the market. It had planned to list last year.

It already set up AyalaLand REIT Inc. to publicly list as a REIT even under the current IRR of the SEC on REITs which require a minimum public ownership requirement of 67 percent.

DoubleDragon Properties Corp. likewise said the company intends to participate in the REIT landscape. Other companies such as Vista Land and Megaworld are also keeping a close watch on the REIT environment for possible participation.

Philippine Stock Exchange (PSE) chief operating officer Roel Refran said on Friday the SEC is expected to issue the REIT implementing rules soon.

The new rules will reduce the minimum public ownership to 33 percent from 67 percent.

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.

He said the SEC hopes 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.

REIT is deemed a very important vehicle to generate more investments especially for real estate companies, but was stalled by tight taxation framework.

Companies that own and operate income-generating real estate assets are considered REIT companies. These include offices, apartment buildings, hotels, warehouses, shopping centers and highways.