The Securities and Exchange Commission (SEC) will expand the assets that may be infused into real estate investment trusts (REIT) in its bid to encourage more companies to list their properties.
SEC Chairman Francis E. Lim said the commission has its own ideas on how to amend the rules, such as redefining income-generating assets.
‘For example, the toll roads, although the company is not the owner, but it has a real right to operate the highway in that long piece of land, that’s a ‘reitable’ asset,’ Lim said.
According to the REIT Act of 2009, an income-generating real estate are those properties that are held for the purpose of generating a regular stream of income, such as rentals, toll fees, user’s fees and the like, as may be further defined and identified by the SEC.
The law gave the SEC the authority to ‘promulgate rules to include real rights over real property, provided they generate interest or other regular payments to the REIT.’
Lim said the agency can include power plants or cell towers, which can be characterized as real estate.
‘They are, under the law, considered immovable properties,’ he said. ‘Real estate assets are immovable properties and therefore by definition under the civil court, they are real property and therefore if they generate income on a regular basis, that’s a ‘reitable’ asset.’
Passed by Congress in 2009, the REIT law did not take off immediately in the country amid issues on public ownership and taxation on asset transfers.
Ayala Land Inc.-backed Areit Inc. was the first to brave the market and listed at the height of the pandemic in August 2020. Four more REITs followed suit the following year in 2021-DoubleDragon Corp.’s DDMP REIT Inc., Filinvest REIT Corp., Megaworld’s Mreit Inc. and the Gokongwei’s RL Commercial REIT Inc.
In 2022, the Villar group added two of its own-VistaREIT Inc. in June and Premiere Island Power REIT Corp. in December-along with Citicore Energy REIT Corp. of the owners of Megawide Construction Corp.