The Philippines is yet another country weighing the benefits of the REIT investment proposition. At the beginning of 2007, the Philippine Stock Exchange (PSE) suggested the proposed Philippine REITs should be structured to meet criteria established under the 2007 Investment Priorities Plan (IPP).
“The IPP is issued annually by the Board of Incentives, in consultation with related government agencies and the private sector,” says Peter Mitchell, CEO with the Asian Public Real Estate Association.
This year’s IPP lists three criteria for proposed Philippine REITs. One, a REIT must be listed on the PSE and incorporated solely for the purpose of owning income-producing real estate assets and securities. Two, a REIT must distribute at least 85 percent of its net income to stockholders and lastly, a REIT must invest at least 70 percent of its total assets in income-producing real estate and real estate related assets.
Mitchell expects introducing REIT legislation will be at least a two-year process. However, once completed, he pinpoints several benefits for the nation’s economy. “REITs can engage, invest or finance in the development of real estate, which may include infrastructure projects that benefit the public,” he says. “Additionally, real estate projects that REITs finance will assist in the development of large infrastructure. Government projects like the Metro Rail Transit or tollways will benefit from the development of properties near them, because real estate development can increase traffic of people who will use these facilities.”
