Here are some of the most important things you need to know about REIT:
• REIT allows investors from the general public to purchase shares in an income-generating property asset. As such, a REIT holds and generates recurring income from real estate with no pressure on the part of public investors to engage in daily operations.
• There are many types of REITs in the Philippines. Most REITs involve office spaces, shopping malls, hospitals, industrial and logistics, port areas, hotels, energy stations, data centers, retirement homes, student housing, even warehouses.
• Why invest in REITs? The Philippines maintains a capital market vibrant enough to sustain infrastructure development, proof of which is the Duterte government’s program to build trillions worth of connectivity and transportation projects nationwide.
• REITs are also easy to access with prices available for assessment through the public market. The minimum public ownership (MPO) and professional management of assets democratize the distribution of returns in REITs.
• REITs are required to comply with the MPO requirement wherein at least 33 percent of their outstanding capital stock must be owned by the investing public. They are also mandated to tap the services of a licensed transfer agent to ensure that dummies will not infiltrate its non-public shareholders.
• There is also some form of assurance that REITs will generate profits no matter what. Under the law, at least 75 percent of REIT’s total assets must be poured in income generating real estate, such as rentals, toll and user’s fees.
• As for security of funds, a REIT is not allowed to undertake property development unless it plans to hold on to the asset upon completion. Also, the aggregate leverage limit of a REIT must not be more than 35 percent.
— Compiled by Elijah Felice Rosales