Vol. XXII, No. 147 [ BusinessWorld Online ]
Thursday, February 26, 2009 | MANILA, PHILIPPINES
THE SENATE approved on second reading yesterday a bill that seeks to create real estate investment trusts (REITs).
Senate Bill No. 2639 allows investors to co-own income-generating assets through REITs, which are stock corporations that pool funds that are then invested in real estate ventures.
The bill requires REITs to distribute at least 90% of its distributable income to its investors and must have a minimum paid up capital of P100 million at the time of their registration.
Senator Edgardo J. Angara, former chairman of the committee on banks, financial institutions and currencies and principal author of the measure, sought the swift approval of the measure before the break on March 6, saying in an earlier interview that REITs would present additional investment vehicles.
"REITs will not only allow the country to participate in the globalization of the real estate investment markets but it will also contribute to the growth and development of the capital market and the country through increased investment activities," he said in a statement.
Allowable investments under the bill are income-producing real properties; real estate-related assets; managed funds, debt securities and shares issued by listed or foreign non-property corporations; government securities issued on behalf of the government and cash and cash equivalent items.
A REIT company must be publicly listed with at least 1,000 shareholders, each owning at least 100 shares of a class of shares who in the aggregate own at least 30% of the outstanding capital stock of the company. The Securities and Exchange Commission is tapped as regulatory agency.
"If we fail to introduce REIT..., we might find our stock market further lagging behind our neighbors. The REIT bill includes measures to ensure we not only move towards the direction our neighbors are moving, but we must also start proceeding at a much faster pace," Mr. Angara added. — Bernard U. Allauigan