MANILA - The House of Representatives approved on second reading House Bill 7525 which provides for a reinvestment framework for Real Estate Investment Trust (REIT) sponsors or promoters.
The bill would also amend Republic Act 9856 also known as "The Real Estate Investment Trust (REIT) Act of 2009."
"A REIT is a stock corporation established principally for the purpose of owning income-generating real estate assets such as apartment buildings, office buildings, medical facilities, hospitals, hotels, resorts, highways, warehouses, shopping centers, railroads, among others. It is a type of investment instrument that provides a return to investors derived from rental income of the underlying real estate asset," House Committee on Economic Affairs Chair, Negros Occidental 1st District Rep. Gerardo Valmayor Jr.
Valmayor explained that the main purpose of the REIT Law is to allow both small and large investors to participate in the direct ownership of real estate.
"It is an alternative investment instrument to foreign investors as well as OFWs. It also provides real estate companies a cheaper source of capital while promoting economic development, growth in tourism and liquidity in the capital markets," Valmayor said.
Valmayor said that House Bill 7525 seeks to further make the real estate industry in the Philippines thrive by introducing provisions that will promote reinvestment of the proceeds made by a sponsor or a promoter from the sale of Real Estate Investment Trust (REIT) shares and other related securities, 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.
Valmayor added that the following salient features were proposed as amendments to the REIT Law:
(a) Defining the term "Reinvestment Plan";
(b) Requiring reinvestment in the Philippines within one (1) year from receipt of proceeds realized by the sponsor or promoter from the sale of REIT shares or 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, in any real estate including its redevelopment, and/or infrastructure projects;
(c) Mandating the REIT to submit a reinvestment plan to the Exchange and the Commission upon registration, and annually secure a Certification from the said Commission of its compliance with the reinvestment plan.
Valmayor urged his colleagues to approve the bill to ensure that subject funds are reinvested in the Philippines and secure full domestic participation in the real estate industry, and assistance to the State in achieving the objectives of its policy.
The House will vote on final reading on the measure, next week.