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Questions and Answers
What is the primary purpose of a REIT?
What is the primary purpose of a REIT?
How are returns from REITs typically distributed to investors?
How are returns from REITs typically distributed to investors?
What type of properties do REITs typically invest in?
What type of properties do REITs typically invest in?
What does the designation of REIT as a 'trust' signify?
What does the designation of REIT as a 'trust' signify?
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When were the Revised REIT Rules approved by SEC?
When were the Revised REIT Rules approved by SEC?
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What are the types of REITs by asset types?
What are the types of REITs by asset types?
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What do the features of REITs include?
What do the features of REITs include?
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When were the Amended Listing Rules for REITs approved by PSE?
When were the Amended Listing Rules for REITs approved by PSE?
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When were the REIT Implementing Rules and Regulations (REIT Rules) approved by SEC?
When were the REIT Implementing Rules and Regulations (REIT Rules) approved by SEC?
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When were the REIT revenue regulations of the Bureau of Internal Revenue (BIR) signed?
When were the REIT revenue regulations of the Bureau of Internal Revenue (BIR) signed?
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For how long have REITs been in Asia?
For how long have REITs been in Asia?
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What resolved industry concerns in the Philippines?
What resolved industry concerns in the Philippines?
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What is the REIT transaction flow?
What is the REIT transaction flow?
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When were the Amended REIT revenue regulations of the BIR signed?
When were the Amended REIT revenue regulations of the BIR signed?
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When were the Listing Rules for REITs approved by the Philippine Stock Exchange (PSE)?
When were the Listing Rules for REITs approved by the Philippine Stock Exchange (PSE)?
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What has led to positive economic outlook and strong real estate investment prospects in Manila?
What has led to positive economic outlook and strong real estate investment prospects in Manila?
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What is the reduced Documentary Stamp Tax (DST) rate available for the transfer of real property to a REIT if the REIT lists within two years from the execution of the transfer document?
What is the reduced Documentary Stamp Tax (DST) rate available for the transfer of real property to a REIT if the REIT lists within two years from the execution of the transfer document?
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Under what conditions can the transfer of real property to a REIT be tax-exempt?
Under what conditions can the transfer of real property to a REIT be tax-exempt?
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What is the tax rate for net taxable income of a REIT with total assets of P100,000 or less?
What is the tax rate for net taxable income of a REIT with total assets of P100,000 or less?
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What is the tax rate for net taxable income of a REIT with total assets exceeding P100,000?
What is the tax rate for net taxable income of a REIT with total assets exceeding P100,000?
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What is the tax rate for dividends paid by a REIT?
What is the tax rate for dividends paid by a REIT?
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Which tax authority must REITs register with before commencing business?
Which tax authority must REITs register with before commencing business?
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What is the minimum percentage of distributable income that REITs are required to distribute?
What is the minimum percentage of distributable income that REITs are required to distribute?
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Which tax is applicable on the original issuance of investor securities?
Which tax is applicable on the original issuance of investor securities?
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What tax is applicable on listed securities during transfer?
What tax is applicable on listed securities during transfer?
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What tax is applicable on transactions involving investor securities outside the exchange?
What tax is applicable on transactions involving investor securities outside the exchange?
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Which entity was previously exempt from dividends tax for 7 years?
Which entity was previously exempt from dividends tax for 7 years?
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What are REITs subject to on gross sales from real property disposal/rental?
What are REITs subject to on gross sales from real property disposal/rental?
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What is the maximum debt limit for a REIT if it has an investment grade rating?
What is the maximum debt limit for a REIT if it has an investment grade rating?
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What is the minimum paid-up capital required for a fund manager in a REIT?
What is the minimum paid-up capital required for a fund manager in a REIT?
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What is the role of the property manager in a REIT?
What is the role of the property manager in a REIT?
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What is required for annual valuation of REIT assets?
What is required for annual valuation of REIT assets?
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What is included in the allowable investments for REITs?
What is included in the allowable investments for REITs?
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When must the exchange furnish the Commission with a copy of the Reinvestment Plan?
When must the exchange furnish the Commission with a copy of the Reinvestment Plan?
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What is the minimum track record required for a REIT-entity or its owned assets?
What is the minimum track record required for a REIT-entity or its owned assets?
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What is the maximum fee allowed for the fund manager in a REIT?
What is the maximum fee allowed for the fund manager in a REIT?
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What is the maximum fee allowed for the property manager in a REIT?
What is the maximum fee allowed for the property manager in a REIT?
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What is required for a firm undertaking to reinvest in Philippine real estate or infrastructure projects?
What is required for a firm undertaking to reinvest in Philippine real estate or infrastructure projects?
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What is the requirement for the appointment of independent parties in a REIT?
What is the requirement for the appointment of independent parties in a REIT?
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What is the maximum debt limit for a REIT if it does not have an investment grade rating?
What is the maximum debt limit for a REIT if it does not have an investment grade rating?
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What is the minimum paid-up capital required for a fund manager in a REIT?
What is the minimum paid-up capital required for a fund manager in a REIT?
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What is the maximum fee allowed for the fund manager in a REIT?
What is the maximum fee allowed for the fund manager in a REIT?
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What are REITs subject to on gross sales from real property disposal/rental?
What are REITs subject to on gross sales from real property disposal/rental?
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What is the tax rate for dividends paid by a REIT?
What is the tax rate for dividends paid by a REIT?
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What tax is applicable on the original issuance of investor securities?
What tax is applicable on the original issuance of investor securities?
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What is the reduced Documentary Stamp Tax (DST) rate available for the transfer of real property to a REIT if the REIT lists within two years from the execution of the transfer document?
What is the reduced Documentary Stamp Tax (DST) rate available for the transfer of real property to a REIT if the REIT lists within two years from the execution of the transfer document?
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What is the minimum public float required for REITs?
What is the minimum public float required for REITs?
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What is the requirement for the appointment of independent parties in a REIT?
What is the requirement for the appointment of independent parties in a REIT?
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What is the tax rate for net taxable income of a REIT with total assets exceeding Php100,000?
What is the tax rate for net taxable income of a REIT with total assets exceeding Php100,000?
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What is the maximum debt limit for a REIT if it does not have an investment grade rating?
What is the maximum debt limit for a REIT if it does not have an investment grade rating?
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What is the tax rate for net taxable income of a REIT with total assets of Php100,000 or less?
What is the tax rate for net taxable income of a REIT with total assets of Php100,000 or less?
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What is the tax rate for listed securities during transfer?
What is the tax rate for listed securities during transfer?
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Study Notes
The Development of REITs in the Philippines
- REIT Implementing Rules and Regulations (REIT Rules) approved by SEC in May 2010
- Listing Rules for REITs approved by the Philippine Stock Exchange (PSE) in June 2010
- The REIT revenue regulations of the Bureau of Internal Revenue (BIR) signed in July 2011
- Revised REIT Rules approved by SEC in January 2020
- Amended Listing Rules for REITs approved by PSE in February 2020
- Amended REIT revenue regulations of the BIR signed in January 2020
- REITs have been in Asia for over 18 years, with the Philippines lagging behind until the IRR revision
- Industry concerns on MPO and VAT issues resolved
- Positive economic outlook and strong real estate investment prospects in Manila
- Features of REITs include defined yield, direct participation in properties, and portfolio diversification
- REIT transaction flow involves the transfer of income-generating real estate assets to the REIT corporation
- Types of REITs by asset types include office, retail, leisure, logistic, healthcare, residential, and diversified REITs.
Key Requirements and Regulations for Real Estate Investment Trusts (REITs) in the Philippines
- REITs must annually distribute at least 90% of distributable income within five months of the fiscal year's close.
- A 3-year track record is required for the REIT-entity or its owned assets, indicating a history of at least 3 years of rental income.
- The maximum debt limit for a REIT is 35% of its deposited property, or 70% if the REIT has an investment grade rating.
- The appointment of independent parties is essential, including a fund manager and property manager, each with specific roles and limitations on fees.
- The fund manager oversees investment strategies, property acquisition, and financial reporting, with fees not exceeding 1% of the Net Asset Value.
- Requirements for the fund manager include independence, competence, and a minimum paid-up capital of Fifty Million Pesos.
- The property manager is responsible for day-to-day real estate asset management, with fees not exceeding 1% of the Net Asset Value.
- Requirements for the property manager include independence, competence, and minimum qualifications for employees.
- A property valuer is required for annual valuation of REIT assets, with specific independence and competence requirements.
- Allowable investments for REITs include income-generating real estate, cash, government securities, and property development projects.
- A firm undertaking to reinvest in Philippine real estate or infrastructure projects is required for proceeds realized by the sponsor/promoter from the sale of REIT shares or income-generating real estate.
- The exchange must furnish the Commission with a copy of the Reinvestment Plan within three days of receipt.
Real Estate Investment Trust (REIT) Overview
- RL Commercial REIT, Inc. and VistaREIT are REIT companies sponsored by Robinsons Land Corp. (RLC) and Vista Land, respectively.
- Investment in a REIT is through subscription or purchase of shares, subject to SEC regulations and restrictions.
- Protection to investors includes rules on minimum public ownership, related party transactions, and oversight of independent directors.
- REITs are subject to stringent SEC and PSE disclosure rules, with sanctions for violations.
- Benefits to investors include participation in a new asset class, high dividend distribution, and equity interest in income-producing real estate.
- Benefits to sponsors/developers include access to capital, tax benefits, and marketing advantages.
- Key considerations for sponsors involve analyzing asset fundamentals, operational track record, control, valuation, and other restrictions.
- Assets that can be contributed into a REIT include real properties providing steady rental streams, such as retail malls, office buildings, and residential developments.
- Qualities of successful REITs include high-quality property assets, potential for growth, and timing in the market.
- Successful REITs require competent fund and property managers, with assets listed in the PSE and specific financial requirements.
- REITs must comply with SEC regulations, including a minimum public float, independent directors, and limitations on director compensation.
- Financial requirements for REITs include a minimum paid-up capital of Three Hundred Million Pesos (Php300,000,000) and PSE listing within 2 years of availment of incentives.
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Description
"Philippine REIT Regulations and Overview" Quiz Test your knowledge of the development, regulations, and key requirements of Real Estate Investment Trusts (REITs) in the Philippines. Explore the history, regulations, and benefits of REITs, and understand the essential rules and considerations for investors and sponsors.
