Diokno urges private sector to promote REIT offerings for economic development

Finance Secretary Benjamin E. Diokno called on the private sector to promote Real Estate Investment Trust (REIT) offerings to fuel economic development during the 5th REIT Philippines Investor Summit on September 19, 2023 at Okada Manila.

“As we embark on the monumental task of revitalizing the economy, I call on our partners in the private sector to come up with more REIT offerings involving a wider variety of assets, especially from renewable energy sources,” Secretary Diokno said in a recorded message.

A REIT is a stock corporation that allows the public to invest and trade in income-generating real estate assets. It is a type of investment instrument that provides returns derived from rental income of the underlying real estate asset, which are distributed to the investors in the form of dividends.

According to Secretary Diokno, the Philippines witnessed its first REIT listing in 2020, a few months after the Securities and Exchange Commission (SEC) and Bureau of Internal Revenue (BIR) relaxed the ownership requirements and tax treatment of REITs and introduced amendments to the implementing rules and regulations (IRR).

“Under the previous administration, the Department of Finance supported the easing of the restrictive ownership and taxation requirements,” he said.

The amendments require sponsors to reinvest proceeds from sales in the Philippines, ensuring that the money invested by Filipinos circulate in the domestic economy, thereby protecting small investors.

REIT offerings are supportive of the government’s push for financial inclusion as these allow everyday Filipinos to participate in profitable and secure investment opportunities in real estate without having to manage properties.

“In fact, individual investors comprise a vast majority of total REIT investors at 98 percent – demonstrating REIT’s potential to be a major driver of financial inclusion,” Secretary Diokno said.

The Finance Secretary referred to REITs as ideal tools for boosting investments to power property development in the country and for diversifying investor portfolios.

“As of July 2023, a total of 93.3 billion pesos of capital funds have been raised from the 8 REIT offerings in the market,