Philippines sweetens rules on REITs with lower public float, tax perks

MANILA, Jan 20 (Reuters) - Philippine real estate investment
trust (REIT) companies will be allowed to maintain control of
their firms and enjoy tax breaks under revised government rules
to attract fresh capital to sustain property market growth,
authorities said on Monday.
REITs have been available to investors in the Philippines
since a 2009 law, but the market has failed to take off because
a high public ownership requirement and transaction taxes turned
off property companies.
Under the revised rules, REITs will only be required to sell
33% of their companies to the public, down sharply from the
previously mandated 67%, the Department of Finance said.
Transfer of assets from the property firm to the REIT
company will now be free of value-added tax, it added.
"We democratise wealth by opening access for thousands of
small investors wanting to be shareholders in secure and
profitable real estate projects," Finance Secretary Carlos
Dominguez said in a speech.
REITs will harness additional resources from the capital
market to help finance and develop infrastructure projects, he
added.
REITs manage real estate assets that regularly generate
profits, which are distributed to shareholders as dividends.
Ayala Land Inc ALI.PS , among the Philippines' top property
firms, said last year it was looking to list a $500 million
REIT, but it did not say when.
Ayala Land is a unit of Ayala Corp, the Philippines' oldest
conglomerate, which has interests ranging from retail, wind and
solar energy and telecoms to banking, healthcare, automotives
and utilities.
The Southeast Asian nation's property sector is among the
most vibrant in the region, with its office segment driven by
business process outsourcing and online gambling, while retail
continues to grow despite competition from e-commerce.