SINGAPORE (Jan 21): The Business Inquirer in the Philippines said on Jan 20 that the Real Estate Investment Trust (REIT) Act has been amended and the revised rules and regulations on REITs was signed on Jan 20. The new framework is acceptable to the markets, the Business Inquirer says following the removal of certain taxes were removed, and a change in minimum public ownership requirements.
“In a bid to lure its first issuer, initial transfer of property into a REIT, [the transaction] will no longer be subject to VAT. Meanwhile, under the revised rules, REITs will only be required to sell 33% of their companies to the public, from the previous 40% in the first year of listing and to 67% within three years,” states a UOB Kay Hian note.
In exchange for lower public ownership requirement, a REIT must reinvest all the proceeds raised from the REIT offering in real estate or infrastructure projects within the country within one year.
There is likely to be no shortage of candidates interested in a REIT listing. Ayala Land is all set to list the Philippines’ first REIT. Last year, Ayala Land is reported to have said it planned to list a Php26 billion REIT comprising prime and Grade-A office assets in the Makati CBD. UOB Kay Hian reckons that the REIT would have to IPO at a dividend yield or around 5% versus the Philippines’ risk-free rate of 4.775%.
Century Properties Group is also looking to participate in the REIT sector, the Philippines’ press reported. DoubleDragon Properties Corp is interested, as are Vista Land and Megaworld, according to the Philippines press.
