Real Estate Investment Trusts is here!

Real Estate Investment Trust, or REIT is (as per *wikipedia) a tax designation for a corporation whose main activities are involved with investing in the real estate sector. The main goal of which is to reduce or eliminate the hefty corporate income tax return usually imposed by the government. 

Under the Philippine Republic Act 9856, an REIT-company, any corporation which will pool income generating property assets and then raise cash from selling stocks in the market will be granted a tax incentive (and other privileges), including a lowered creditable withholding tax rate of 1% for income payments received. Also, processing fees and documentary stamp taxes will also be reduced for sale or transfer of the properties.

Finance secretary Mr. Cesar Purisima said that the Department of Finance is consulting with the Stock Exchange Commission, on revising the initial minimum stock requirements to be sold to the public from 33.33% to more than 50%. This, according to him, is to ensure that the REIT raised capitals won't be used to finance debt repayment for these companies.

Mr. Val Antonio Suarez, President and CEO en banc, of the Philippine Stock Exchange said that they will be looking at the DOF's proposals after consulting their listing rulings. Mr. Suarez further comments that the "the government wanted higher public ownership of REITs and reinvestment of capital in three years..."

I bet this will be the biggest single market event that will the country's investing public so badly needs right now. Initially and unofficially, there are around 10 companies eyeing listing for the REIT category in 2010. Crossing my fingers that all the "creases" will be ironed out soon... Will provide additional update on this with my own REIT investment activities...

Source: Business World - Philippines