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What are REITs?
#1
R.E.I.T. stands for Real Estate Investment Trust. Eto po, I was browsing the PSE website a couple of months ago and came across this memo/primer to help me understand what REITs are.

http://www.pse.com.ph/html/NewsRoom/memo...1-0020.pdf

Question: In what medium/fashion will the REITs be offered? Magiging IPOs din po ba sila in the same manner as a regular issue/stock sa ating PSE?

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#2
Lawyer mode muna tayo ha.

R.A. 9856

How will it be issued?

SEC. 5. Registration and Listing. – The shares of stock of the REIT must be registered with the Commission and listed in accordance with the rules of the Exchange.

Dividend Policy?

SEC. 7. Dividend Distribution. – A REIT must distribute annually at least ninety percent (90%) of its distributable income as dividends to its shareholders not later than the last day of the fifth (5″) month following the close of the fiscal year of the REIT. Subject to the provisions of this Act, the dividends shall be payable only from out of the unrestricted retained earnings of the REIT as provided for under Section 43 of the Corporation Code of the Philippines. The percentage of dividends received by the public shareholders to the total dividends distributed by the REIT from out of its distributable income must not be less than such percentage of their aggregate ownership of the total outstanding shares of the REIT. Any structure, arrangement or provision which would have the effect of diminishing or circumventing in any form this entitlement to dividends shall be void and of no force and effect.

How will the funds from the public offering be utilized?

Sec. 8.3 Allowable Investments – A REIT may only invest in:

i. Real estate, whether freehold or leasehold, located In the Philippines. A REIT may invest in income-generating real estate located outside of the Philippines: Provided, That such investment does not exceed forty percent (40%) of its deposited property and only upon special authority from the Commission. The Commission in issuing such authority shall consider, among others, satisfactory proof that the valuation of assets is fair and reasonable. An investment in real estate may be by way of direct ownership or a shareholding in an unlisted special purpose vehicle constituted to hold/own real estate;

ii. Real estate-related assets, wherever the issuers, assets, or securities are incorporated, located, issued, or traded;

iii. Managed funds, debt securities and listed shares issued by local or foreign non-property corporations;

iv. Government securities issued on behalf of the Philippine government or governments of other countries and securities issued by multilateral agencies;

v. Cash and cash equivalent items; and

vi. Such other similar investment outlets as the Commission may allow.

How are REIT assets valued?

Sec. 8.12 Valuation – A full valuation of a REIT’s assets must be conducted by an independent appraisal company, duly accredited by the Commission, at least once a year In accordance with the applicable rules of asset valuation and valuation methodology’ as prescribed by the Commission.

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Basically, Real Estate Investment Trusts (REITs) are managed funds (like Mutual Funds and Unit Investment Trust Funds). But the allowable assets are real estate and related ventures and some investment securities (debt and equities).

Why invest in REITs?

1. The Tax perks! Less tax = better bottomline = more dividends (see article III of the the above RA)
2. Dividend policy (see above)


Kinda rough, pero Q&A might clarify things.

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