Santos Knight Frank was heavily involved in the formulation of the REIT Act of 2009. A REIT is a publicly listed stock corporation that owns income-generating real estate assets, such as malls, offices, warehouses and infrastructure. REIT companies are mandated by law to distribute 90% of their retained earnings as dividends. It was envisioned to promote the development of the capital market. However, developers had been reluctant to put their assets into a REIT corporation due to high friction cost and unfavorable minimum public ownership requirement. 

Recently, government agencies have been addressing the primary issues in the REIT Law’s implementing rules and regulations. Firstly, the Bureau of Internal Revenue clarified that under the TRAIN Law, the initial transfer of assets to REITs would be exempted from Value- Added Tax. Secondly, the Securities & Exchange Commission expressed that it favored a lower minimum public ownership at 33%.

Rick Santos, Chairman & CEO, Santos Knight Frank says: “REITs have the power to democratize the Philippine property market, allowing the small individual investor on the street to invest in high-value real estate assets along with the big players.” 

He adds: “We have recently seen an influx of queries from companies seeking REIT advice. Once the new rules are released, REITs will become a strong avenue of capitalization by developers amid rising interest rates. REITs have immense potential to fuel construction activities across the country and generate jobs along the way.” 

Companies such as Megaworld Corp., DoubleDragon Properties Inc. and Robinsons Land Inc. have publicly expressed interest in REITs. 

“Philippine GDP in 2018 grew by 6.2% - the country’s 7th consecutive year of growth above 6%. There is room for expansion in 2019 as strong macroeconomic fundamentals remain sound and foreign capital continue to be invested in the country," says Santos. 

With a global network of more than 500 offices, including prominent REIT markets such as Singapore, Hong Kong and the U.S., Santos Knight Frank is positioned to advise REIT corporations and investors on structure, management and legal requirements. ”

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