Wednesday, 13 October 2010 00:00 [ manilatimes.net ]
By Krista Angela M. Montealegre, Reporter
The corporate regulator has received a proposal from the tax bureau to amend the implementing rules of the Real Estate Investments Trust (REIT) Act.
In a notice posted on its website, the Securities and Exchange Commission (SEC) said Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-
Henares, upon instructions of Finance Secretary Cesar Purisima, has asked the corporate watchdog last week to revise certain sections of the REIT Act, or Republic Act No. 9856, specifically those on minimum public ownership and capitalization.
The government wants REIT firms to initially sell at least 51 percent of their outstanding capital stock and further increase their public float to at least 67 percent in the next three years.
The government also wants REIT companies to invest 50 percent of their capital in new infrastructure projects in the first year and the remaining funds to be invested before the third year of their establishment.
The BIR said this would ensure that REITs would be a means to develop infrastructure projects and not merely “to convert ownership in existing infrastructure to liquid assets, and to prevent companies from de-leveraging and by using established REIT merely to pay off existing debts.”
The BIR also proposed to delete the section regarding the appointment of a property manager since the REIT company was “expected to be an expert in dealing with property management.”
The corporate regulator asked the public “especially the participants in the real estate industry, the stock market and other interested parties in the business sector” to give comments on or before October 29.
Property developers led by Ayala Land Inc. (ALI), SM Prime Holdings Inc. and Robinsons Land Corp. have expressed interest in doing REIT offerings.
SM Prime and ALI said they would wait for the final implementing rules before issuing a statement on the matter.
REIT proponents are forming a group that would draft an official response to the proposed amendments to the implementing rules of the REIT, Teresa Cecilia Reyes, SM Prime vice president for finance, said.
“Based on what I heard from the industry, the [public float requirement] of 67 percent is too big,” Reyes said.
The Philippine Stock Exchange has recommended an alternative that involves raising the minimum paid-in capital to P1 billion from P300 million, said bourse president Val Antonio Suarez.
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