PSE to make sure REIT proceeds remain in PH

The Philippine Stock Exchange (PSE) has drafted revisions to the rules on listing real estate investment trusts (REITs) to allay regulators’ concerns that money raised from a domestic offering would be invested overseas instead of funding local property projects.

The PSE proposed that the rules be amended to require all REITs to invest at least 75 percent of deposited property to income-generating real estate, provided it would not invest in real estate located outside the Philippines.

To be able to invest outside the Philippines, the REIT must seek special authority from the Securities and Exchange Commission.

This proposal is “guided by the government’s policy of reinvestment in the country of proceeds from offerings of REIT,” PSE president Ramon Monzon said.

REIT gives investors the option to invest directly in finished products already earning money—such as residential and office units, hotels or shopping malls or even infrastructure ventures like toll roads and power plants.

Ten years after the passage of the REIT law, the asset class has not taken off because of provisions on value added tax (VAT) and minimum public ownership (MPO).  The Tax Reform for Acceleration and Inclusion enacted at end-2017 has already resolved the impasse.

Under Section 8 of the REIT law (Republic Act. No. 9856), the SEC has the authority to restrict foreign investments of REITs “to … develop the country’s real estate investment industry to make it globally competitive.” —DORIS DUMLAO-ABADILLA