Wednesday, March 04, 2009 [ manilatimes.net ]
THE Philippine Stock Exchange (PSE) said the Senate passed on third reading a bill that would broaden investments in real estate and related assets.
In a statement, Francis Lim, PSE president and chief executive officer, said the Real Estate Investment Co. (REIC) bill, when enacted into law, would allow the establishment of a corporation for the purpose of owning income-generating real estate and related assets whose shares of stock will be made accessible to small and large investors alike. Markets for real estate investment trusts (REIT) already operate in other countries.
Lim said the REIC bill would also develop the country’s infrastructure system such as highways, airports, bridges and tollways. It can also strengthen tourism with shopping center developments, additional hotels, condominium and hospitals.
“The proposed law mandates the listing of these stocks in a stock exchange to enable the general public to participate, through equity ownership in the REIC and enjoy a stable source of dividend income. A REIC must be owned by at least 30 percent of the investing public and it must distribute annually at least 90 percent of its distributable income to its shareholders,” Lim said.
“Under the law, ordinary Filipinos will not only own a part of a mall or hotel but will also share annually in the income of these establishments. I believe the REIC system is a win-win for our economy because it presents an attractive investment vehicle for local and foreign investors, thereby accelerating the growth of the local stock market,” he said.
The Asian REIT markets have shown strong growth potential with their combined capitalization of $68.3 billion in 2008, up from $46 billion in 2006. Asian REIT’s contribution to the total global market capitalization last year likewise grew to 11.3 percent from 7.6 percent in 2006.
As of 2008, the number of listed REIT in Asia represented close to one-fifth of the total across the globe.
The law will also enhance shareholder value as the base for the income tax of the REIC is determined after the dividend distribution. The REIC is mandated to distribute at least 90 percent of its net income to its shareholders.
“To give a concrete example, if the net income of the REIC is P100 million and distributes P90 million to its shareholders, it will be taxed only on the P10 million,” Lim said.
The House version of the REIC bill is awaiting consideration by the chamber’s Ways and Means Committee.-- Johanna M. Sampan
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