Friday, 15 October 2010 00:00 [ manilatimes.net ]
Proponents of the Real Estate Investment Trust (REIT) Law warned that delaying the implementation would risk losing foreign investors to other markets, which were now preparing similar investment offerings.
“The Philippine REIT industry may not be able to take advantage because foreign investors might go to the other jurisdictions,” Francis Lim, former president of the Philippine Stock Exchange, told reporters.
China would roll out two REITs by the end of the year involving low-cost subsidized housing, while Thailand’s securities regulator recently approved in principle a plan to create REIT funds.
Lim, who chaired the technical working group for the passage of the REIT Law, urged the Securities and Exchange Commission (SEC) to make the implementing rules “market friendly” and strike a balance between what would be beneficial to all parties concerned.
He said the original 33.3-percent minimum public ownership was a “compromise” after regulators initially recommended a majority public ownership of as much as 60 percent.
“My biggest concern is we should make the law market-friendly, otherwise it will not achieve the objective it was set out to do,” the former PSE chief said.
The implementation of the REIT Law is in limbo amid a deadlock between fiscal authorities and the SEC over its implementing rules. The corporate watchdog is seeking public comments regarding the proposed amendments to the rules sought by the Bureau of Internal Revenue (BIR).
“[The rules should] strike a balance between what is good for the market, the investors, the issuers, and hopefully that balance will be achieved after we make the submissions,” said Jaime Ysmael, Ayala Land Inc. (ALI) chief finance officer.
“We have to look now at how much we’re going to need over the next three years and adjust that offering to that size so we would not be in violation of the implementing rules,” said Jeffrey Lim, SM Prime Holdings Inc. executive vice president and chief finance officer.
The two property developers said they are working on their inputs for submission to the SEC, but they are optimistic that the issue would be addressed.
“As developers, we are committed to seeing this through. These are just temporary issues, delays that we may face but we are optimistic we can launch the product in the Philippines,” Ysmael said.
Under the proposed amendments, 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.
On Wednesday, the Asia Pacific Real Estate Association (APREA) launched its Philippine chapter, its seventh in the region behind Japan, Singapore,
South Korea, Australia and India. APREA has been an active proponent of the REIT law, recommending measures to make the REIT market more attractive for investors.
“The Philippine real estate market is a unique and growing market, with REITs around the corner, which domestic and overseas investors cannot afford to ignore,” Peter Mitchell, APREA chief executive officer, said.
Krista Angela M. Montealegre
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