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Bill requiring REITs to reinvest in PHL hurdles House panel


A BILL that requires real estate investment trusts (REITs) to reinvest proceeds from their fundraising activities in the Philippines has been approved at the committee level in the House of Representatives.

The House economic affairs committee approved on Tuesday House Bill No. 6500, which proposes to amend Republic Act No. 9856, or The Real Estate Investment Trust Act of 2009.

Cagayan de Oro Rep. Rufus B. Rodriguez, the author of the bill, said that there is “a need to ensure that the funds invested in these companies are reinvested in the Philippines to secure full domestic participation in the real estate industry.”

The proposed amendment would require a sponsor or promoter to reinvest in the Philippines proceeds realized from the sale of REIT shares “within one year from the date of receipt of proceeds or money by the sponsor/promoter.”

Proceeds subject to the reinvestment rule also include “other securities issued in exchange for income-generating real-estate transferred to the REIT, and any money raised by the sponsor or promoter from the sale of any of its income-generating real-estate to the REIT, in any real estate.”

This includes any redevelopment project and infrastructure projects in the Philippines.

REITs are required to submit a reinvestment plan to the Philippine Stock Exchange and Securities and Exchange Commission upon registration, and must also secure a certification yearly to show that it is compliant with its reinvestment plan.

According to the bill, a reinvestment plan is “a sworn statement duly received by the exchange and the commission, signed by the sponsor/promoter and the principal shareholder of the REIT.”

If signed into law, the proposed measure “would help increase and encourage more investments, employment/jobs, other business/economic activities in the country. Especially if the growth rate/potential in the country is more promising/attractive as a positive factor for investors,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, said via chat.

UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion said the measure aims to safeguard the industry since it is still in its nascent stages.

“Future amendments may have to deal with the easing of such rules once the industry is deemed more stable or mature. It would be good to look into best practices from other REIT markets in the region that have reached a high level of success,” he said in a Viber message.

Mr. Asuncion added though that the bill “can also be a deterrent since investors would be looking for more flexibility especially in this era of new and higher uncertainty.”

REITs are stock corporations primarily owning income-generating real estate properties. The seven REITs in the Philippines are AREIT, Inc., Citicore Energy REIT Corp., DDMP REIT, Inc., Filinvest Reit Corp., MREIT, Inc., Premier Island Power REIT Corp., RL Commercial REIT, Inc., and VistaREIT, Inc. — Beatriz Marie D. Cruz

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