The Philippine Stock Exchange is seeking the revival of the Real Estate Investment Trust framework in a bid to boost the Philippine equities market.
PSE president and chief executive Ramon Monzon said over the weekend the exchange was working with the Securities and Exchange Commission for the issuance of the new rules of REIT that will reduce the the minimum public offering to 33 percent from 67 percent.
“The market needs trading volume to sustain or to increase its level. But that volume is not going to come from local investors. It is going to come from foreign investors. So we need to address economic issues. Also we should have some new products,” Monzon said.
He said Finance Secretary Carlos Dominquez was amenable to lowering the minimum public ownership of REIT firms as long as the funds to be raised from the REIT listing would be kept in the Philippines.
“Initially there was still resistance from the finance secretary. But he will agree to lower the minimum public ownership if we can address the concern that funds raised from REIT offering will stay in the country and not invested outside. So we will make that a requirement,” Monzon said.
The minimum public ownership and the tax on property transfers were major issues that prompted big property developers to shun the REIT law, which could potentially raise as much as $3 billion worth of capital raising activities at the PSE.
Monzon said while the tax issue on property transfers had been resolved under the Package 1 of the Tax Reform for Acceleration and Inclusion law, the minimum public ownership remained a stumbling block.
The REIT law allows real estate companies to sell through an initial public offering shares of real-estate trusts that hold assets, like shopping malls and office buildings. Since these assets generate a steady stream of income, they will pay regular dividends to shareholders.
When the REIT Act became a law at the end of 2009, several property firms, including SM Prime Holdings, Ayala Land Inc., Megaworld Corp. and Robinsons Land Corp., have expressed interest in conducting a REIT offering.