Updated December 03, 2008 12:00 AM [ philstar.com ]
The Philippine Stock Exchange (PSE) welcomed the House committee on Economic Affairs’ approval of a bill that allows investors a wider participation in the ownership of real estate and related assets.
PSE president and chief executive officer Francs Lim said the Real Estate Investment Trust (REIT) bill adds to the growing list of market-friendly legislations some of which were already signed into law, namely, the Personal and Equity Retirement Account Act and the Credit Information System Act.
“The approval by the House economic affairs committee of the REIT bill brings the country a step closer to putting in place a system that will meaningfully enable ordinary Filipinos to share in the ownership of income-generating real estate.
Under this system, ordinary Filipinos will not only own a part of a mall or hotel but will share annually in the income of these establishments. The REIT system is a win-win for our economy. It will help develop our capital markets and at the same time provide investors with a stable source of dividend income,” he said.
The REIT bill was drafted to permit the establishment of a corporation for the purpose of owning income-generating real estate assets and real estate-related assets, whose shares of stock will be made accessible to small and large investors alike. The proposed law mandates the listing of these stocks in a stock exchange to enable the general public to buy the stock.
Consistent with the constitutional mandate of democratizing wealth, the REIT limits the concentration of the ownership of its shares ensuring that no particular group of people wholly owns and controls the entity.
“Listing the shares of stocks of a REIT presents an opportunity for the growth of the local stock market and gives an alternative investment option to our investors,” Lim said. “The investing public is likewise assured of safeguards in the REIT bill since the proposed law puts restrictions on the use of their funds and imposes additional disclosure obligations on REITs.”
The House version introduced critical provisions to protect investors such as, cap in investments in synthetic products, mandatory disclosure of material information relating to the REIT, mandatory return of investment in case of delisting of the REIT by the stock exchange.
Under the House version, investors are also guaranteed that on a timely basis, 90 percent of the REIT’s distributable income will be declared and paid out as dividends to its shareholders not later than the 15th day of the fourth month following the end of its fiscal year.
“The steady stream of income is a major selling point for this investment vehicle as financial markets seek a balance between risk aversion and decent profits as the crisis lingers,” Lim noted.
The House version also expands the membership of the body that will draft the REIT law’s implementing rules and regulations to include other stakeholders such as the Philippine Stock Exchange.
“We welcome this role and embrace this obligation as an opportunity to ensure that the interests of market participants and investors are considered,” Lim said.
