SEC tweaks rule on REIT property manager
June 21, 2019 | 12:31 am [ bworldonline.com ]
THE Securities and Exchange Commission (SEC) has proposed to
amend rules covering the property manager of a real estate investment trust
(REIT), in time for the issuance of such a product within the year.
In a notice posted on its website, the SEC said the
amendments will cover Rule 7 of the Implementing Rules and Regulation of
Republic Act No. 9856, otherwise known as the REIT Law.
Under the rule, a REIT is tasked to appoint a property
manager that should be “independent of the REIT, its promoter/s or sponsor/s.”
The SEC is seeking to add provisions that would ensure the
independence of the property manager, saying that “majority of the members of
the board of the REIT property manager must be independent directors with
working knowledge of the real estate industry.”
“The directors (including independent directors) of the REIT
and its sponsors/ promoters cannot occupy more than 49% of the board of
directors of the property manager,” according to the proposed amendment.
The commission also added a section that defined the
“related party transactions committee,” which will review such deals.
“Majority of its members must be independent directors who
shall vote unanimously in approving such related party transactions.”
The commission is requesting all interested parties to
comment on the proposed amendments until July 4.
SEC Commissioner Ephyro Luis B. Amatong earlier said they
can finish the consultation process within 15 days, after which they can
approve the guidelines.
Issues on the independence of the REIT’s property manager
have been one of three factors that dissuaded real estate industry players from
launching such a product. The other two factors are the high minimum public
ownership requirement of 40-67%, and the 12% value-added tax on transfer of
real properties into the REIT vehicle.
The taxation issue has been removed following the passage of
the Tax Reform for Acceleration and Inclusion law last year. On the other hand,
while some companies have complained of the high MPO requirement, Mr. Amatong
noted that there are some who are willing to comply with this.
For instance, Ayala Land, Inc. said it is prepared to file
for a REIT offering under existing rules. It earlier announced that it wants to
raise P25-26 billion through a REIT anchored on its prime office assets in the
Makati Central Business District.
Once rules on the REIT property manager have been resolved,
Mr. Amatong is optimistic that the first REIT listing in the country may
finally hit the ground this year. — Arra B. Francia
