THE HOUSE of Representatives on Wednesday approved on second reading a bill requiring real estate investment trusts (REITs) to reinvest the proceeds of their fundraising activities in the Philippines.
House Bill No. 7525, which seeks to amend the Real Estate Investment Trust Act of 2009, was approved by lawmakers through viva voce (voice vote).
House economic affairs committee chairman and Negros Occidental Rep. Gerardo P. Valmayor Jr. told the plenary the measure will help boost growth in the real estate industry.
“(The bill) introduces provisions that will promote reinvestment of proceeds made by a sponsor or promoter from the sale of REIT shares… and encourage sponsors and promoters to build, sell and reinvest their proceeds/ gains that may result in the growth of more infrastructure projects benefitting the Filipinos,” he said.
Under the bill, a REIT sponsor or promoter is required to reinvest the proceeds of the sale of REIT shares in the Philippines “within one year from receipt of proceeds realized by the sponsor or promoter.”
Also subject to reinvestment are “other securities issued in exchange for income-generating real estate transferred to the REIT, or any money raised by the sponsor or promoter from the sale of any of its income-generating real estate to the REIT.” This includes any redevelopment, and/or infrastructure projects in the Philippines.
REITs will also be mandated to submit a reinvestment plan to the Philippine Stock Exchange and Securities and Exchange Commission upon registration and secure a certification annually to prove that it is compliant with its reinvestment plan.
Republic Act No. 9856 or the REIT Act was enacted in 2009 but drew zero REIT issuances over the past decade because of its tight rules. The government finally relaxed requirements for REITs in January 2020, which encouraged property companies to launch their own REITs.
There are currently eight REITs in the country, namely 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