The Securities and Exchange Commission (SEC) urged real estate companies to tap the capital market for their growth and financing needs.
The SEC earlier formally launched the streamlined rules for the registration of securities by companies with rental pool arrangements.
It introduced the guidelines of Securing & Expanding Capital in Real Estate Investment Transactions (SEC RENT) on May 21 at the SEC headquarters in Makati City.
Implemented through SEC Memorandum Circular No. 12, Series of 2024 issued on July 16, 2024, SEC RENT simplifies the registration process for securities of real estate companies engaged in selling or offering investment contracts through rental pool agreements.
Rental pool agreements refer to investment contracts where a property developer sells or offers units in real estate projects such as condominiums, hotels or resorts to the public, provided that buyers contribute the units to a rental pool managed and operated by the company or a third-party operator.
Buyers in a rental pool agreement will receive a share in profits based on agreed conditions, typically by renting out the units to third parties.
“Accounting for 5.6 percent of GDP (gross domestic product) in 2024, the real estate industry continues to be a vital engine of economic development, with strong interconnections to construction, finance, retail, and tourism,” SEC Commissioner McJill Bryant Fernandez said.
“Given its scale and strategic importance, the real estate sector stands to benefit immensely from deeper participation in the capital market.”
Under the program, the SEC Markets and Securities Regulation Department (MSRD) is required to complete the review of the registration statement of the covered companies within 45 days from filing.
The launch was conducted in partnership with the Chamber of Real Estate & Builders’ Association, Inc. (CREBA), an organization with over 4,000 members including firms, individuals and associations involved in the property industry.
“We probably look at securities offering and all these types of capital market sourcing as for the big players alone. Small companies like us traditionally resort into borrowings as source of funds to continue operating our businesses,” CREBA Vice President for Housing Affairs Demetrio Posadas.
“Our organization appreciates the efforts being extended by the SEC for now reaching out not only to big developers, but likewise for making us understand that we, small companies, probably have a chance to participate in this capital market.” (PNA)
