by Elaine R. Alanguilan
[ manilastandardtoday.com ] February 17, 2011
The Finance Department is now amenable to allowing developers avail of tax incentives on real estate investment trusts, or Reits, with an initial minimum public float of below 51 percent.
Finance Secretary Cesar Purisima told reporters Wednesday the Reits, which were delayed after the government and the private sector failed to agree on the minimum public float requirement, would now proceed.
“There is a series of meetings going on with the Securities and Exchange Commission and the Philippine Stock Exchange [PSE] on the development of the capital markets and as to how we would go on the Reit matter,” he said.
“Essentially, we are now willing to implement the Reit, without [requiring] companies to comply immediately with the 51-percent public flotation requirement,” Purisima said at the sidelines of the general membership meeting of the Financial Executive Institute of the Philippines.
The government is “open” to letting a Reit initially sell less than 50 percent provided it will later boost public ownership, Purisima said. The Reit proponent will be “allowed to retain management control,” he added.
In September, Purisima said at least 50 percent plus one of a Reit should be sold immediately instead of 33.3 percent as required by law. He also said then that 67 percent of the trust must be publicly owned in three years from the sale.
“Of course, we want each real estate firm to maintain the management of their own corporations. Only that the public would become the majority owner representing 51-percent shares,” said Purisima.
The government last year placed on hold the publication of the implementing rules and regulations of the Reit law. Finance said it wanted companies to first give up 50 percent plus 1 percent of their shares to the public in order to enjoy fiscal incentives and other perks.
The Finance Department wanted the SEC to raise the percentage of Reit shares to be offered to the public from 33 percent to 50 percent plus 1, and further up to 67 percent in three years’ time.
The government said the higher ownership would expand the public’s participation in the real estate industry and enable it to benefit more from the sector.
The Finance Department estimates revenue losses of P3.7 billion a year from the implementation of the Reit Act. The government expects to lose P1 billion for the first year alone.
_____________________________________________________________
