SEC eyes improved REIT regulations

MANILA, Philippines — The Securities and Exchange Commission (SEC) is preparing to issue enhanced rules for real estate investment trust (REIT) to boost participation in the space.

SEC chairperson Francis Lim said the revised rules for Republic Act 9856, or the REIT Act of 2009, are currently “a work in progress.”

Lim said the SEC is discussing with REIT participants the commission’s own ideas on how to liberalize the REIT rules.

“We will define what the income-generating assets are. We will enumerate them to minimize issues. What is really an income-generating asset?” Lim said.

“For example, electric towers, they’re income-generating, so that can be REIT-able assets. Toll roads, although the company is not the owner, but they have the real right to operate the highway, that long piece of land, that’s a REIT-able asset. So we will be giving examples,” he said.

Lim said that power plants and cell towers could also be characterized as REITs because, under the law, they are considered immovable properties.

“Real estate assets are immovable properties and therefore, by definition under the Civil Code, they are real property and therefore, if they generate income on a regular basis, that’s a REIT-able asset,” Lim said.

“So it’s like we’re expanding the definition so that more companies will be able to list,” he said.

In line with its goal of deepening the capital market, the SEC earlier said that it is considering revising the implementing rules and regulations of the REIT Act to better meet market demands.

To promote reforms in REIT, the SEC is reviewing rules to expand eligible assets, lengthen the reinvestment period, and attract broader participation.

The implementing rules and regulations of the Real Estate Investment Act of 2009 were issued in 2020, a move aimed at spurring the growth of the sector.

Companies that own and operate income-generating real estate assets are considered REIT companies.

Congress passed the REIT Act in 2009, as it was deemed a vital vehicle to generate more investments, especially for real estate companies.

Ayala Land’s AREIT was the first REIT in the country, listing its shares in the Philippine Stock Exchange in 2020.

Other REITs soon followed, such as DoubleDragon’s DDMP REIT, Filinvest REIT of the Gotianun family, Megaworld’s MREIT, Gokongwei’s RL Commercial REIT, Citicore Energy REIT and Villar Group’s VistaREIT and Premiere Island Power REIT.

Analysts attribute REIT stet to the inclusion of new asset types such as prime office and residential buildings, hotels, malls and renewable energy infrastructure.