The Securities and Exchange Commission (SEC) released the draft Implementing Rules and Regulations (IRR) of R.A. 9856, otherwise known as “The Real Estate Investment Trust (REIT) Act of 2009” for comments of the public before its promulgation.

The IRR of RA 9856 shall make way for the full implementation of the REIT Act which seeks to promote the development of capital market and democratize wealth by broadening the participation of Filipinos in the ownership of real estate companies in the Philippines.

The REIT law also aims to use the capital market as an instrument to help finance and develop  infrastructure projects and protect the investing public.

With a minimum capitalization of P300 million, a REIT company may apply for registration of its securities with the SEC and avail of incentives as provided for by the law, such as favorable tax rates and lowered fees.

On the side of the investor, shareholders will be assured of steady income flow with the law requiring REIT companies to declare annually at least 90 percent of its distributable income as dividends to its shareholders.

The SEC said it will be receiving comments on the draft IRR until April 26, 2010. Most of the country’s giant real estate companies are looking at raising fresh capital through the formation of REIT companies and selling their shares through an initial public offering.

However, all have been waiting for the release of the IRR so they can study its provisions before finalizing their plans. This will help them determine which of their properties that generate recurring income will be suitable for inclusion in the REIT subsidiary.

However, SM Prime Holdings and Ayala Land Inc. have already indicated that they are planning REIT offerings of around $300 million to have enough liquidity to attract foreign investors.