14
Republic of the Philippines SECURITIES AND EXCHANGE COMMISSION SEC Building, EDSA, Greenhills Mandaluyong City IMPLEMENTING RULES AND REGULATIONS OF THE REAL ESTATE INVESTMENT TRUST (REIT) ACT OF 2009 Pursuant to Section 22 of Republic Act No. 9856, An Act Providing the Legal Framework for Real Estate Investment Trust, the following Implementing Rules and Regulations are hereby promulgated. Rule 1 Title of Rules These Rules shall be referred to as the "Implementing Rules and Regulations of Republic Act No. 9856, otherwise known as the Real Estate Investment Trust (REIT) Act of 2009" or the "REIT Rules." Rule 2 Objectives These Rules are promulgated consistent with the declared policy of the State to promote the development of the capital market, democratize wealth by broadening the participation of Filipinos in the ownership of real estate in the Philippines, use the capital market as an instrument to help finance and develop infrastructure projects, and protect the investing public. The implementation and application of these Rules shall adhere as closely as possible to the attainment of the foregoing policy objectives. Rule 3 Definition of Terms Used in the Rules When used in these Rules and Regulation, the term a. "Act" means Republic Act No. 9856 otherwise known as the Act Providing the Legal Framework for Real Estate Investment Trust. b. "Adviser" means a lawyer, accountant, auditor, financial or business consultant, and such other persons rendering professional advisory services to REIT. c. "Affiliate" means a corporation that directly or indirectly, through one or more intermediaries, is controlled by, or is under the common control of, another corporation, which thereby becomes its parent corporation. d. "Associate" of a person includes: i. Any relative of such person within the fourth (4th) degree of consanguinity or affinity; and ii. Any company in which he/she and his/her relative within the fourth (4th) degree of consanguinity or affinity, directly or indirectly, has an interest of twentyfive percent (25%) or more. e. "BIR" means the Bureau of Internal Revenue. f. "BSP" means the Bangko Sentral ng Pilipinas. g. "Cash Equivalent Items" means instruments or investments that are highly liquid and marketable and are considered good as cash, including savings and/or time deposits (peso or foreign currency denominated) maintained with any duly licensed universal, commercial or thrift bank that has passed the accreditation process of the Fund Manager. h. "Code of Corporate Governance" means the Revised Code of Corporate Governance issued by the Commission on 22 June 2009 and made effective on 15 July 2009; and as may be amended by the Commission. i. "Commission" or "SEC" means the Securities and Exchange Commission of the Philippines. j. "Constitutive Documents" means the Articles of Incorporation and ByLaws of a REIT. k. "Control" exists in favor of a parent corporation when it has the power to direct or govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. Control is presumed to exist when the parent owns, directly or indirectly, through subsidiaries, more than one half (1/2) of the voting power of an enterprise, unless, in exceptional circumstances, it can clearly be demonstrated that such ownership does not constitute control. Control also exists even when the parent owns one half (1/2) or less of the voting power of an enterprise when there is power: i. Over more than one half (1/2) of the voting rights by virtue of an agreement with investors; ii. To direct or govern the financial and operating policies of the enterprise under a statute or an agreement; iii. To appoint or remove the majority of the members of the board of directors or equivalent governing body; or iv. To cast the majority votes at meetings of the board of directors or equivalent governing body. l. "Corporation Code" refers to Batas Pambansa Bilang 68, otherwise known as the Corporation Code of the Philippines. m. "Deposited Property" means the total value of the REIT's assets reflecting the fair market value of the total assets held by the REIT. n. "Distributable Income" means net income as adjusted for unrealized gains and losses/expenses and impairment losses, and other items in accordance with internationally accepted accounting standards. Distributable income excludes proceeds from the sale of the REIT's assets that are reinvested in the REIT within one (1) year from the date of the sale. o. "DST" means Documentary Stamp Tax imposed under Title VII of the NIRC p. "Exchange" means any entity registered with the Commission as a stock exchange pursuant to the Securities Regulation Code. q. "Fund Manager" refers to the person engaged by the REIT to perform such functions enumerated in these Rules. r. "Incomegenerating Real Estate" means real property which is held for the purpose of generating a regular stream of income such as, but not limited to, rentals, toll fees, user's fees, ticket sales, parking fees and storage fees.1avvphi1 s. "Independent Director" means a director who has the qualifications and none of the disqualifications of an independent director as specified in the Securities Regulation Code and its Implementing Rules and Regulations. t. "Investible Funds" refers to funds of the REIT that can be placed in investment vehicles other than incomegenerating real estate, as allowed under these Rules. u. "Investor" means the owner of Investor Securities. v. "Investor Securities" means shares of stock issued by a REIT or derivatives thereof. w. "Managed Funds" means any arrangement whereby funds are solicited from the investing public and pooled for the purpose of investing in securities duly registered and/or approved by the appropriate regulatory agency of the government for

RA 9856 IRR

Embed Size (px)

DESCRIPTION

RA 9856 IRR

Citation preview

  • RepublicofthePhilippinesSECURITIESANDEXCHANGECOMMISSION

    SECBuilding,EDSA,GreenhillsMandaluyongCity

    IMPLEMENTINGRULESANDREGULATIONSOFTHEREALESTATEINVESTMENTTRUST(REIT)ACTOF2009

    Pursuant to Section 22 ofRepublic Act No. 9856, An Act Providing the Legal Framework for Real Estate Investment Trust, thefollowingImplementingRulesandRegulationsareherebypromulgated.

    Rule1TitleofRulesTheseRulesshallbereferredtoasthe"ImplementingRulesandRegulationsofRepublicActNo.9856,otherwiseknownastheRealEstateInvestmentTrust(REIT)Actof2009"orthe"REITRules."

    Rule2ObjectivesTheseRules are promulgated consistentwith the declared policy of theState to promote the development of the capitalmarket,democratizewealth by broadening the participation of Filipinos in the ownership of real estate in thePhilippines, use the capitalmarketasaninstrumenttohelpfinanceanddevelopinfrastructureprojects,andprotecttheinvestingpublic.The implementation and application of theseRules shall adhere as closely as possible to the attainment of the foregoing policyobjectives.

    Rule3DefinitionofTermsUsedintheRulesWhenusedintheseRulesandRegulation,theterm

    a. "Act" means Republic Act No. 9856 otherwise known as the Act Providing the Legal Framework for Real EstateInvestmentTrust.

    b. "Adviser" means a lawyer, accountant, auditor, financial or business consultant, and such other persons renderingprofessionaladvisoryservicestoREIT.c."Affiliate"meansacorporationthatdirectlyorindirectly,throughoneormoreintermediaries,iscontrolledby,orisunderthecommoncontrolof,anothercorporation,whichtherebybecomesitsparentcorporation.d."Associate"ofapersonincludes:

    i.Anyrelativeofsuchpersonwithinthefourth(4th)degreeofconsanguinityoraffinityandii.Anycompanyinwhichhe/sheandhis/herrelativewithinthefourth(4th)degreeofconsanguinityoraffinity,directlyorindirectly,hasaninterestoftwentyfivepercent(25%)ormore.

    e."BIR"meanstheBureauofInternalRevenue.f."BSP"meanstheBangkoSentralngPilipinas.g."CashEquivalentItems"meansinstrumentsorinvestmentsthatarehighlyliquidandmarketableandareconsideredgoodas cash, including savingsand/or timedeposits (pesoor foreign currencydenominated)maintainedwith anyduly licenseduniversal,commercialorthriftbankthathaspassedtheaccreditationprocessoftheFundManager.h."CodeofCorporateGovernance"meanstheRevisedCodeofCorporateGovernanceissuedbytheCommissionon22June2009andmadeeffectiveon15July2009andasmaybeamendedbytheCommission.i."Commission"or"SEC"meanstheSecuritiesandExchangeCommissionofthePhilippines.j."ConstitutiveDocuments"meanstheArticlesofIncorporationandByLawsofaREIT.k."Control"existsinfavorofaparentcorporationwhenithasthepowertodirectorgovernthefinancialandoperatingpoliciesof an enterprise so as to obtain benefits from its activities.Control is presumed to existwhen the parent owns, directly orindirectly, through subsidiaries, more than one half (1/2) of the voting power of an enterprise, unless, in exceptionalcircumstances,itcanclearlybedemonstratedthatsuchownershipdoesnotconstitutecontrol.Controlalsoexistsevenwhentheparentownsonehalf(1/2)orlessofthevotingpowerofanenterprisewhenthereispower:

    i.Overmorethanonehalf(1/2)ofthevotingrightsbyvirtueofanagreementwithinvestorsii.Todirectorgovernthefinancialandoperatingpoliciesoftheenterpriseunderastatuteoranagreementiii.Toappointorremovethemajorityofthemembersoftheboardofdirectorsorequivalentgoverningbodyoriv.Tocastthemajorityvotesatmeetingsoftheboardofdirectorsorequivalentgoverningbody.

    l."CorporationCode"referstoBatasPambansaBilang68,otherwiseknownastheCorporationCodeofthePhilippines.m."DepositedProperty"meansthetotalvalueoftheREIT'sassetsreflectingthefairmarketvalueofthetotalassetsheldbytheREIT.n."DistributableIncome"meansnetincomeasadjustedforunrealizedgainsandlosses/expensesandimpairmentlosses,andother items inaccordancewith internationallyacceptedaccountingstandards.Distributable incomeexcludesproceeds fromthesaleoftheREIT'sassetsthatarereinvestedintheREITwithinone(1)yearfromthedateofthesale.o."DST"meansDocumentaryStampTaximposedunderTitleVIIoftheNIRCp."Exchange"meansanyentityregisteredwith theCommissionasastockexchangepursuant to theSecuritiesRegulationCode.q."FundManager"referstothepersonengagedbytheREITtoperformsuchfunctionsenumeratedintheseRules.r."IncomegeneratingRealEstate"meansrealpropertywhichisheldforthepurposeofgeneratingaregularstreamofincomesuchas,butnotlimitedto,rentals,tollfees,user'sfees,ticketsales,parkingfeesandstoragefees.1avvphi1s. "IndependentDirector"means a directorwho has the qualifications and none of the disqualifications of an independentdirectorasspecifiedintheSecuritiesRegulationCodeanditsImplementingRulesandRegulations.t."InvestibleFunds"referstofundsoftheREITthatcanbeplacedininvestmentvehiclesotherthanincomegeneratingrealestate,asallowedundertheseRules.u."Investor"meanstheownerofInvestorSecurities.v."InvestorSecurities"meanssharesofstockissuedbyaREITorderivativesthereof.w."ManagedFunds"meansanyarrangementwherebyfundsaresolicitedfromtheinvestingpublicandpooledforthepurposeof investing in securities duly registered and/or approved by the appropriate regulatory agency of the government for

  • investmentand/orreinvestmentbytheREIT.x."MaterialContract"referstoanagreementorarrangementwheretheamount involved isat least fivepercent(5%)of theDeposited Property of the REIT or which is not entered into in the ordinary course of business of the REIT: Provided,however,ThatthefollowingshallbedeemedaMaterialContractregardlessoftheamount:

    i.RelatedPartyTransactionsasdefinedintheseRulesii.AgreementsbetweentheREITandFundManageriii.AgreementsbetweentheREITandPropertyManageriv. Agreements between and among shareholders relating to the transferability of the shares of stock of the REIT,control of the REIT and voting rights over shares of stock of the REIT, such as but not limited to, voting trustagreements,poolingagreements,jointventureagreements,optionagreements,andagreementsgrantingrightsoffirstrefusalorconversionrightsv.AnyacquisitionordispositionofrealestatebytheREITvi.ContractsrelatingtoinvestmentsoftheREITvii.Anycontractcreatingmortgages,encumbrances,liensorrightsontherealestateoftheREITviii.ContractofanynaturethatlimitsthedeclarationordistributionofdividendsbytheREITix.Anycontractrelatingtojointventure,spinoff,consolidationormerger,takeoverorchangeinControlinvolvingtheREITx.Anycontractthatmaybeexpectedtomateriallyaffectthemarketactivityand/orthepriceoftheInvestorSecurities.

    y. "Net Asset Value" or "NAV" means the adjusted net asset value reflecting the fair market values of total assets andinvestible funds held by the REIT, less total liabilities. NAV per share shall be computed by dividing NAV by the totaloutstandingsharesoftheREIT.z."NetIncome"meansnetincomeasdeterminedunderthePhilippineFinancialReportingStandards(PFRS).aa."NIRC"meanstheNationalInternalRevenueCodeof1997,asamended.bb."OverseasFilipinoInvestor"referstoanindividualcitizenofthePhilippineswhoisworkingabroad,includingonewhohasretainedorreacquiredhisPhilippinecitizenshipunderRepublicActNo.9225,otherwiseknownasthe"CitizenshipRetentionandReacquisitionActof2003".cc."PAS"meansPhilippineAccountingStandards.dd. "Parent" means a corporation which has control over another corporation, directly or indirectly, through one or moreintermediaries.ee."PFRS"meansPhilippineFinancialReportingStandards.ff. "PrincipalOfficer"means thechairmanof theboardofdirectors,president,chiefexecutiveofficer,chiefoperatingofficer,treasurer,chieffinancialofficer,corporatesecretary,vicepresident,executivevicepresident,seniorvicepresident,complianceofficer,chiefaccountingofficer,chiefinvestmentofficerandtheirequivalentpositions,includingconsultantswithsimilarrankorposition.gg."PropertyValue"meansanindependententityengagedbyaREITtovalueitsrealestateinaccordancewiththeseRules.hh. "PrincipalStockholder"meansastockholderwho is,directlyor indirectly, thebeneficialownerofmore than tenpercent(10%)ofanyclassofInvestorSecuritiesoftheREIT.ii."PublicShareholder"meansashareholderofaREITotherthanthefollowingpersons(nonpublicshareholders):

    i.TheSponsor/PromoteroftheREITii.Adirector,PrincipalOfficerorPrincipalStockholderoftheSponsor/PromoteroftheREITiii.Adirector,PrincipalOfficerorPrincipalStockholderoftheREITiv.Anassociateofadirector,PrincipalOfficerorPrincipalStockholderoftheREIToritsSponsor/Promoterv.ARelatedCorporationtotheREIToritsSponsor/Promoterandvi. Any personwho holds legal title to the shares of stock of theREIT for the benefit of another for the purpose ofcircumventingtheprovisionsofthisAct.

    jj. "PropertyManager" refers to a professional administrator of real propertieswho is engaged by theREIT to provide thepropertymanagementservicesdefinedundertheseRules.kk."RealEstateInvestmentTrust"or"REIT"isastockcorporationestablishedinaccordancewiththeCorporationCodeofthePhilippines and the rules and regulations promulgated by the Commission principally for the purpose of owning incomegenerating real estate assets. For purposes of clarity, a REIT, although designated as a "trust", does not have the sametechnical meaning as "trust" under existing laws and regulations but is used herein for the sole purpose of adopting theinternationallyaccepteddescriptionofthecompanyinaccordancewithglobalbestpractices.ll. "Real Property" shall have the same definition as "Immovable Property" under Article 415 of the Civil Code of thePhilippines.Realestate,whenusedinthisAct,shallhavethesamemeaningasrealproperty.mm."REITPlan"referstotheplan,includingitsamendments,oftheREITregisteredwithandapprovedbytheCommission.nn."RealEstateRelatedAssets"mean:

    i.Debtsecuritiesandlistedsharesissuedbylistedpropertycompaniesorii.Otherfundsandassets,includingpersonalproperty,incidentaltotheownershipofrealestate.

    oo."RelatedCorporation"meanstheParent,SubsidiaryorAffiliateoftheREIT.pp."RelatedParty"includes:

    i.Adirector,PrincipalOfficerorPrincipalStockholderoftheREITorassociateofsuchpersonsii.TheSponsor/PromoteroftheREITiii.TheFundManageroftheREITiv.TheAdviseroftheREITv.ThePropertyManageroftheREIT

  • vi.Adirector,PrincipalShareholderorPrincipalOfficeroftheSponsor/PromoteroftheREITFundManagerorPropertyManager,orassociateofanysuchpersonsandvii.RelatedCorporationtotheREIT,theFundManagerorthePropertyManager.

    qq. "SecuritiesRegulationCode" or "SRC" refers toRepublicActNo. 8799, otherwise knownas theSecuritiesRegulationCodeof2000,anditsImplementingRulesandRegulationsasamended.rr. "Sponsor/Promoter"means any personwho, acting alone or in conjunctionwith one ormore other persons, directly orindirectly,contributescashorpropertyinestablishingaREIT.ss."Subsidiary"meansacorporationmorethanfiftypercent(50%)ofthevotingstockofwhichisownedorcontrolled,directlyorindirectly,throughoneormoreintermediaries,byanothercorporation,whichtherebybecomesitsparentcorporation.tt. "Synthetic Investment Products" are derivatives and other securities created exclusively out of one or more financialinstrumentstosimulatethereturnsoftheunderlyingassetsor indicesofassetvalues, including,butnot limitedtowarrants,options, interest rate derivatives, currency derivatives, equity derivatives and credit derivatives such as creditlinked notes,collateralizeddebtobligations,totalreturnswaps,creditspreadoptionsandcreditdefaultoptions.uu."TaxableNetIncome"meansthepertinent itemsofgrossincomespecified inSection32oftheNIRC, lessallallowabledeductionsenumeratedinSection34,oftheNIRC,lessthedividendsdistributedbyaREIToutofitsDistributableIncomeasoftheendofthetaxableyearas:(a)dividendstoownersofthecommonsharesand(b)dividendstoownersofthepreferredsharespursuanttotheirrightsandlimitationsspecifiedintheArticlesofIncorporationoftheREIT.

    Rule4RealEstateInvestmentTrustSection1.InvestmentintheREIT.1.1InvestmentinaREITshallbebywayofsubscriptiontoorpurchaseofsharesofstockoftheREIT.1.2 A REITmay provide in its Articles of Incorporation different classes of shares of stock enumerating therein their respectivefeatures.1.3NosharesofstockoftheREITshallbeofferedforsubscriptionorsaletoPublicShareholdersexceptinaccordancewithaREITPlan registeredwith and approved by theCommission. TheREIT Plan shall take the place of a prospectus. It shall contain thefollowinginformation:

    a.investmentpolicy,restrictionsandstrategyoftheREITb.discussiononthebusinessplanforpropertyinvestmentandmanagementcoveringthescopeandtypeofinvestmentsmadeorintendedtobemadebytheREIT,includingthetype(s)ofrealestate(e.g.leisure,residential,commercial,orindustrial)c.generalcharacterandcompetitiveconditionsofall realestatenowheldor intendedtobeacquiredbytheREITandhowsuchrealestatemeetstheestablishedcriteriaforselectiond.natureandrisksofmakingpropertyinvestmentsineachoftherelevantlocations,including:

    i.demographicsii.stateoftheeconomy,economicrisksandforeignexchangeriskiii.politicalrisksiv.legalrisksandtaxconsiderationsv.policiesthataffectpropertyinvestmentsandpropertysalesvi.overviewofthepropertymarketvii.analysisofthespecificpropertysectorandthecompetitivedynamicsintherentalmarketviii.operationalrequirementandix.rulesandregulationsgoverningpropertyownershipandtenancymatters

    e. termsandconditionsof thearrangementsoragreementsthathavebeenenteredintobytheREITfor it toownlegalandbeneficialtitleoverspecificproperty,andthebenefitsandrisksofsucharrangementsincludingbutnotlimitedto,anyagrarianrelatedissues,ifanyf. transaction history of the relevant property in the three (3) years immediately preceding the date of the valuation reportincludedintheREITPlang.anyproposedprogramwithtimetableforrenovationorimprovementtotherealestate,includingtheestimatedcoststhereofandthemethodoffinancingtobeusedh. the operating date of each of the real estate, including the occupancy rate, number of tenants and itsmix in terms ofoccupation or business, principal provisions of the leases, averageannual rental per squaremeter, and schedule of leaseexpirationsforthenextthree(3)yearsi.theborrowingpolicyandthemethodorproposedmethodofoperatingandfinancingtherealestateinvestmentsoftheREITj.whererealestatetobeacquiredaretobefinanced(whollyorinpart)throughborrowings,detailsoftheborrowingsmustbedisclosedincluding,butnot limitedto, thesource,type,term/periodandnatureof theborrowingsandtheinterestratetobepaidbytheREITandtherisksinvolvedwithrespecttoborrowingsk.themeasuresinplacetomitigateorminimizerisksrelatingtotheinvestmentandmanagementofrealestateownedbytheREITl.thedividendpolicym.theinsurancearrangementfortheassetsoftheREITn.theexitstrategyintheeventofdivestment(includingtheexitfromanyjointownershiparrangement),factorsandriskswhichmayimpactoractasanimpedimenttoanexit,andthecontingencyplano.detailsoftransactionsoragreementsenteredintowithrelatedpartiesp.fullparticularsofthenatureandextentoftheinterest,ifany,ofanydirectoroftheREIT,theFundManager,thePropertyManageroranyRelatedPartiestotheREIT,inthepropertyownedorproposedtobeacquiredbytheREITandwheretheinterestofsuchadirectorconsistsinbeingapartnerinafirm,thenatureandextentoftheinterestinthefirm,withastatementofallsumspaidoragreedtobepaidtohimorthefirmforservicesrenderedtotheREITq.functions,dutiesandresponsibilitiesofthePropertyManagerandtheFundManagerand,whereapplicable,shareholdingofthePropertyManagerand/ortheFundManagerintheREITr. corporate information on the Property Manager, including number of years in real estate/property management or

  • alternatively, informationon two(2) responsibleofficerswhohaveat least five (5)years track record in realestate/propertymanagement,totalassetsundermanagement,staffstrength,resources,internalcontrolsandriskmanagementsystems. informationonthedirectorsandPrincipalOfficersofthePropertyManager,highlightingtheacademicand/orprofessionalqualificationaswellasexperiencepossessedbytherespectivepersonnelt. corporate information on the Fund Manager, including number of years in fund management, total assets undermanagement,staffstrength,internalcontrolsandriskmanagementsystemu. information on the directors and Principal Officers of the FundManager, highlighting the academic and/or professionalqualificationaswellasexperiencepossessedbytherespectivepersonnelv.detailsonsubstantialfeestobepaidbytheREIT,suchaspropertymanagementfeesandfundmanagementfees.Thefeespaid to thePropertyManagerandtheFundManagermustbeclearlystatedandshall include: (i) thepercentagerate tobepaidbytheREIT(ii)thebasisonwhichthepropertymanagementfeeiscalculatedand(iii)anillustrationonhowthefeeiscalculatedw.names,designationandthedirectandindirectshareholdingsintheREITofPromoters,PrincipalShareholders,directors,PrincipalOfficersandprincipalofficersofthePropertyManagerandtheFundManagerx.disclosureonhowtheproceedsofthepublicofferingandanyotherfundsraisedinconnectionwiththepublicofferingwillbeutilizedwithtimetableandy.proformafinancialstatementswhichshall include informationonNetAssetValueandNetAssetValuepersharebeforelistingandaftertheproposedpublicoffering.

    1.5Inordertobevalid,anymaterialamendmenttotheREITPlanshallbeapprovedbytheCommission.AnyamendmenttothePlanshallbeeffectiveonlyuponcompliancewiththerequirementsrelativetosaidamendment/s.Section2.RegistrationandListing.ThesharesofstockoftheREITshallberegisteredwiththeCommissioninaccordancewiththeSRCandlistedinaccordancewiththerulesoftheExchange.Section3.NationalityRequirement.AREITthatownslandlocatedinthePhilippinesmustcomplywithforeignownershiplimitationsimposedunderPhilippinelaw.Section4.DividendDistribution.AREITshalldistributeannually,atotalofatleastninetypercent(90%)ofitsDistributableIncomeasdividendstoitsshareholders,notbelaterthanthelastworkingdayofthefifth(5th)monthfollowingthecloseofthefiscalyearoftheREITsubjecttothefollowing:

    (a)ThedividendshallbepayableonlyfromtheunrestrictedretainedearningsoftheREITasprovidedforunderSection43of theCorporationCode.However, the retainedearningsof theREITmayonlybe restrictedandnotavailable fordistributionunder thecircumstancesenumeratedunderSection43of theCorporationCodeandwhenapprovedbyatleast amajority of the entiremembership of the board of directors, including the unanimous vote of all IndependentDirectorsoftheREITprovidedfinally,oncethepurposeoftherestrictionisaccomplished,theREITshall immediatelycanceltherestrictionanddistributethecorrespondingretainedearningsuponmajorityvoteofthemembersoftheboardofdirectors.

    (b) The percentage of dividendswith respect to any class of stock to be received by thePublic Shareholders to the totaldividendswithrespecttothatclassofstockdistributedbytheREITfromoutofitsDistributableIncomemustnotbelessthansuchpercentageoftheiraggregateownershipofthetotaloutstandingsharesoftheREITwithrespecttothatclassofstock.Any structure, arrangement or provision which would have the effect of diminishing or circumventing in any form thisentitlementtodividendsshallbevoidandofnoforceandeffect.(c) The income distributable as dividend by the REIT shall be based on the audited financial statements for the recentlycompleted fiscal year prior to the prescribed distribution. The audited financial statements of the REIT shall present acomputationofitsdistributabledividendtakingintoconsiderationrequirementsundertheprovisionsoftheActandthisRule.However, theaudited financialstatementsshallnotberequiredbefore theREITcandistributequarterlyand/orsemiannualdividendsprovided, theREIThas reasonablegrounds tobelieve that themaximumdividends that itmaydistribute insuchfiscalyearshallnotbemore than itsDistributable Incomebasedon itsaudited financialstatements forsuch fiscalyear,asprovidedabove.(d) A REIT may declare either cash, property or stock dividends. Provided that, in addition to the requirements of theCorporationCode,thedeclarationofstockdividendsmustbeapprovedbyatleastamajorityoftheentiremembershipoftheboard of directors, including the unanimous vote of all independent Directors of the REIT and subject to approval of theCommissionwithin five (5)working days from receipt of the request for approval. If theCommission does not act on saidrequestwithinsuchperiod,thesameshallbedeemedapproved.(e)DistributableincomeexcludesproceedsfromthesaleofREIT'sassetsthatarereinvestedbytheREITwithinone(1)yearfromthedateofthesale.Gainfromthesaidsaleshall,however,formpartofthedistributableincome.(f)TheincomedistributebytheREITshallbeadjustedbydeductingthefollowingunrealizedornonactualgainsandlosses:

    (i)Unrealizedforeignexchangegains,exceptthoseattributabletocashandcashequivalents(ii)Fairvalueadjustmentorthegainsarisingfrommarkedtomarketvaluationwhicharenotyetrealized(iii)Fairvalueadjustmentofinvestmentpropertyresultingtogain(iv)Theamountofrecognizeddeferredtaxassetthatreducedtheamountofincometaxexpenseandincreasedthenetincomeandretainedearnings,untilrealized(v)Adjustmentduetoadeviationfromanyoftheprescribedaccountingstandardwhichresultstogain(vi)Other unrealizedgainsor adjustments to the incomeasa result of certain transactionsaccounted for under thePhilippineFinancialReportingStandards.

    (g)Nonactual expenses/losses that are allowed to be added back to distributable income shall be limited to the followingitems:

    (i)Depreciationonrevaluationincrement(aftertax)(ii)Adjustmentduetofromanyoftheprescribedaccountingstandardwhichresultstoaloss(iii)Lossonfairvalueadjustmentofinvestmentproperty(aftertax).

    Section5.Requirement.TheREITshallcomplywiththefollowingrequirements:5.1BodyCorporate.

    a.Minimum Public Ownership. A REIT shall be a public company and to be considered as such, a REIT shall: (a)maintain its status as a listed company and (b) upon and after listing, have at least one thousand (1,000) PublicShareholderseachowningatleastfifty(50)sharesofanyclassofshares,andwho,intheaggregate,ownatleastone

  • third(1/3)oftheoutstandingcapitalstockoftheREIT.A REIT shall, from the time of incorporation, issue shares to, or record the transfer of all its shares into the name ofshareholders, investorsor,securities intermediary intheformofuncertificatedshares. Itshallengagetheservicesofadulylicensedtransferagenttomonitorsubsequenttransferoftheshares.Saidregistrarshallensurethatthesharesaretraceableto the names of the shareholders or investors and for their own benefit and not for the benefit of any of the nonpublicshareholders.Thesharesmayberegisteredunderanomineeandthenomineeshallmakeavailabletothetransferagentthenamesoftheshareholdersinsuchfrequencyasmaybenecessaryforthetransferagenttoperformitsbasicfunctions.Compliancewith theminimumpublicownership requirementunder this sectionshall beduly certifiedby the transferagentuponlisting,asofrecorddateforanydividenddeclarationoranycorporateactionrequiringshareholderapprovalandotherrelevanttimesasmayberequiredbytheCommission.b.Capitalization.AREITshallhaveaminimumpaidupcapitalofThreeHundredMillionPesos(Php300,000,000.00)at thetimeofincorporationwhichcaneitherbeincashand/orproperty.c.IndependentDirectors.At leastonethird(1/3)orat least two(2),whichever ishigher,of theboardofdirectorsofaREITshallbeindependentdirectors.d.OrganizationandGovernance.Asapubliccompany,theREITshallhavesuchorganizationandgovernancestructurethatisconsistentwiththeRevisedCodeofCorporateGovernanceandpertinentprovisionsoftheSRCanditsIRR.TheREITshallholdsuchmeetingsasprovidedforinitsConstitutiveDocumentspursuanttotheCorporationCode.

    5.2ExecutiveCompensation.ThetotalannualcompensationofalldirectorsandPrincipalOfficersoftheREITshallnotexceedtenpercent(10%)ofthenetincomebeforeregularcorporateincometaxoftheREITduringtheimmediatelyprecedingtaxableyear,andshallbegovernedbythedisclosurerequirementsofPAS24.5.3FundManagerandPropertyManagerFees.TheREITshallengageaFundManagerandaPropertyManagerinaccordancewiththeseRules.ThefeesreceivedbytheFundManagerandthePropertyManagerfromtheREITshallnotexceedonepercent(1%)oftheNetAssetValueoftheAssetsundertheirrespectivemanagement.Section6.Functionsof theREIT.Unlessotherwisestated in theseRules, theREITshallhaveallof thepowersofacorporationundertheCorporationCode,andshallperformallof thefunctionsofacorporation,except thoseexpresslydelegatedundertheseRulestothefundManagerandtothePropertyManager,andthosethatarenecessarysuchasbutnotlimitedtothefollowing:

    a.appointaFundManager,aPropertyManagerandaPropertyValuerb.ensurethatthefinancialandeconomicaspectsoftheREITareprofessionallymanagedintheinterestoftheshareholdersandcreditors.c.formulatetheannualinvestmentstrategyandpolicyoftheREITinaccordancewiththeREITPland.determinetheannualborrowinglimitoftheREIT,inaccordancewiththeREITPlane.determinetheacquisitionanddispositionplanofrealestatepropertiesinaccordancewiththeinvestmentobjectiveindicatedintheREITPlanf. implementappropriatepoliciesandconductduediligence reviewssuch that investmentsaremadeonlyaftercarefulanddiligentinvestigationsbytheREITg.formulatedividendpaymentschedulesoftheREITh.maintainorcausetobemaintainedproperbooksandrecordsoftheREITandcausethepreparationoftheREIT'sfinancialstatementsi.ensurethatalldocuments inrelationtotheREIT(excludingdocumentscontainingcommerciallysensitive information)aremadeavailableforinspectionbytheshareholdersandcreditorsoftheREITinthePhilippines,duringnormalofficehours,attheplaceofbusinessoftheREITandensurethatcopiesofsuchdocumentsareavailableuponrequestbyanyshareholderorcreditoruponpaymentofareasonablefeej. ensure compliancewith any applicable laws, rules, codes or guidelines issued by governmental departments, regulatorybodies,exchangesoranyotherrelevantorganizationsregardingtheactivitiesoftheREIToritsadministrationandk.maintainandimplementinvestorrelationsprocedureswhetheronlineorotherwisetohandlequeriesandcomplaints.

    InnocaseshalltheREITperformquasibankingfunctionswithouttherequisitelicenseissuedbytheBSP.Rule5AllowableInvestmentsoftheREIT

    Section1.AllowableInvestments.AREITmayonlyinvestin:1.1Realestate.

    a. A REITmay invest in real estate located in the Philippines, whether freehold or lease hold. At least seventyfivepercent(75%)oftheDepositedPropertyoftheREITshallbeinvestedin,orconsistof, incomegeneratingrealestate.DepositedPropertythatshouldbeinvestedinIncomegeneratingRealEstatelocatedinthePhilippinesshallinnocasebelessthan35%oftheDepositedProperty.

    b.AREITmayinvestinincomegeneratingrealestatelocatedoutsideofthePhilippinesProvided,thatsuchinvestmentdoesnot exceed forty percent (40%) of its Deposited Property and only upon special authority from the Commission. TheCommissionin issuingsuchauthorityshallconsider,amongothers,satisfactoryproofthatthevaluationofassets isfairandreasonable.c.An investment in realestatemaybebywayofdirectownershiporashareholding inadomesticspecialpurposevehicleconstitutedtohold/ownrealestate,subjecttotheconditionsprovidedundertheseRules.d.Acquisitionofarealestateshallincludetheownershipofallrights,interestsandbenefitsrelatedtotheownershipoftherealestate.e.TherealestatetobeacquiredbytheREITshouldhaveagoodtrackrecordforthree3yearsfromdateofacquisition.

    1.2Realestaterelatedassets,wherevertheissuers,assets,orsecuritiesareincorporated,located,issued,ortraded.1.3EvidenceofindebtednessoftheRepublicofthePhilippinesandotherevidenceofindebtednessorobligations,theservicingandrepayment of which are fully guaranteed by theRepublic of the Philippines, such as, but not limited to, treasury bills, fixed ratetreasurynotes,retailtreasurybonds,(denominatedeitherinPhilippineorinforeigncurrency)andforeigncurrencylinkednotes.1.4Bondsandotherevidenceofindebtednessissuedby:

    a. thegovernmentofany foreigncountrywithwhich thePhilippinesmaintainsdiplomatic relations,withacredit ratingobtainedfromareputablecreditratingagencyoracreditratingagencyacceptabletotheCommissionthatisatleasttwo

  • (2)notcheshigherthanthatofROPbondsandb. supranationals (or international organizations whose membership transcends national boundaries or interests, e.g.InternationalBankforReconstructionandDevelopment,AsianDevelopmentBank).

    1.5CorporatebondsofnonpropertyprivatelyowneddomesticcorporationsdulyregisteredwiththeCommissionwithacurrentcreditratingofatleast"A"byanaccreditedPhilippineratingagency.1.6 Corporate bonds of a foreign nonproperty corporation registered in another country provided that the said bonds are dulyregisteredwiththeCommissionandtheforeigncountrygrantsreciprocalrightstoFilipinos.1.7CommercialpapersdulyregisteredwiththeCommissionwithacurrentinvestmentgradecreditratingbasedontheratingscaleofanaccreditedPhilippineratingagencyatthetimeofinvestment.1.8Equitiesofanonpropertycompany listed ina localor foreignstockexchange,provided that thesestocksshallbe issuedbycompaniesthatarefinanciallystable,activelytraded,possessgoodtrackrecordofgrowthandhavedeclareddividendsforthepastthree(3)years.1.9CashandCashEquivalentItems.1.10Collective investmentschemesdulyregisteredwiththeCommissionororganizedpursuanttotherulesandregulationsoftheBSPprovidedhoweverthat:(i)thecollectiveinvestmentschemesmusthaveatrackrecordofperformanceatparwithorabovethemedianperformanceofpooledfundsinthesamecategoryasappearingintheprescribedweeklypublicationoftheNetAssetValuePerUnitoftheCollectiveInvestmentSchemeunitsand(ii)newcollectiveinvestmentschemesmaybeallowedprovidedthatitsfundmanagerhasatleastathree(3)yeartrackrecordinmanagingpooledfunds.1.11OffshoremutualfundswithratingsacceptabletotheCommission.1.12InvestmentsoftheREITshallberecognizedandmeasuredinitsfinancialstatementsinaccordancewiththerequirementsofthePFRSandtheapplicableinterpretationsoranyamendmentsthereto,asfollows:

    a.InvestmentProperty(PAS40andrelatedstandards)b.FinancialAssets(PAS39,PFRS7andrelatedstandards)c.InvestmentsinAssociates(PAS28)d.InvestmentsinSubsidiaries(PAS27)e.InterestsinJointVentures(PAS31)f.NoncurrentAssetsHeldforSaleandDiscontinuedOperations(PFRS5)g.Leases(PAS17).

    1.12SyntheticInvestmentProducts,providedthat:(i)SyntheticInvestmentProductsshallnotconstitutemorethanfivepercent(5%)oftheInvestibleFundsoftheREIT,(ii)theREITshallavailofsuchSyntheticInvestmentProductssolelyforthepurposeofhedgingriskexposuresoftheexistinginvestmentsoftheREIT(iii)theSyntheticInvestmentProductsshallbeaccountedforinaccordancewith PFRS (iv) the Synthetic Investment Products shall be issued by authorized banks or nonbank financial institutions inaccordancewith the rulesandregulationsof theBSPand/or theSECand(iv) theuseofSynthetic InvestmentProductsshallbedisclosedintheREITPlanandunderspecialauthorityfromtheSEC.Section2.PropertyDevelopment.AREITshallnotundertakepropertydevelopmentactivitieswhetheronitsown,inajointventurewithothers,orby investing inunlistedpropertydevelopmentcompanies,unless: (i) it intends tohold in feesimple thedevelopedpropertyforatleastthree(3)yearsfromdateofcompletion(ii)thepurchaseagreementofthesaidpropertyismadesubjecttothecompletionofthebuildingwithpropercoverforconstructionrisks(iii)thedevelopment/constructionofrealstateshallbecarriedoutoftermswhichthebestavailablefortheREITandwhicharenolessfavorabletotheREITthananarm'slengthtransactionbetweenindependentpartiesand(iv)theprospectsfortherealestateuponcompletioncanbereasonablyexpectedtobefavorable.The total contract value of property development activities undertaken and investments in uncompleted property developmentsshouldnotexceedtenpercent(10%)oftheDepositedPropertyofREIT.Section3.LeaseholdProperty.Wherealeaseholdpropertyisacquired,theconsentoftheregulatoryauthoritytotransfertheleaseshallbeobtained.Theleaseshallberegisteredlease.Section4.Encumbrances.Unlessotherwisedisclosed,allrealestateshallbefreefromallencumbrancesatthetimeofacquisition,exceptforchargesenteredbyfinancialinstitutionsinrelationtoloanfacilitiesextendedfortheconstructionoracquisition,exceptforchargesenteredbyfinancialinstitutionsinrelationtoloanfacilitiesextendedfortheconstructionoracquisitionoftherealestate.Section5.Insurance.AllrealestateacquiredbyREITshallbeinsuredfortheirfullreplacementvalue,includinglossofrental,whereappropriate,withinsurancecompaniesapprovedbytheFundManager.Section6.SingleEntityLimit.Notmore than fifteenpercent (15%)of the InvestibleFundsof theREITmaybe investedanyoneissuer'ssecuritiesoranyonemanagedfund,exceptwithrespecttothePhilippinegovernmentsecuritieswherethelimitistwentyfivepercent(25%).Section7.ForeignAssets. AREITmay invest in local or foreign assets, subject to the termsof itsConstitutiveDocuments andspecific provisionsof theseRules.Wherean Investment in a foreign real estateasset ismade, theREIT shouldensure that theinvestment complies with all the applicable laws and requirements in that foreign country, such as , but not limited to foreignownershiprestrictions,ifany,andrequisitesofhavinggoodandvalidtitletotherealestate.1avvphi1Section8.AggregateLeverageLimit.The totalborrowinganddeferredpaymentsofaREITshouldnotexceed thirty fivepercent(35%)ofitsDepositedPropertyProvided,however,thatthetotalborrowingsanddeferredpaymentsofaREITthathasapublicitydisclosed investment grade credit rating by a duly accredited or internationally recognized rating agency may exceed thirtyfivepercent (35%) but notmore than seventy percent(70%) of itsDepositedProperty.Provided, further that in no case shall a FundManager,borrowfortheREITfromanyofthefundsunderitsmanagement.Section 9.Related Party Transactions. Any contract or amendment thereto, between the REIT and Related Parties, includingcontractsforservices,shallcomplywiththefollowingminimumrequirements:

    a. Full, fair, timely and accurate disclosures on the identity of the parties, their relationshipwith theREIT, and otherimportanttermsandconditionsofthetransactionhavebeenmadetotheExchangeandtheCommission

    b.Beonfairreasonableterms,includingthecontractpricec. Approved by at least a majority of the entire membership of the board directors, including the unanimous vote of allindependentdirectorsoftheREITd. Accompanied by a fairness opinion by an independent appraiser done in accordance with the valuation methodologyprescribedbytheCommission,inthecaseofanacquisitionordispositionofrealestateassetsandpropertyorshareswapsorsimilartransactionsand

  • e.AnyothermatterthatmaybemateriallyrelevanttoaprospectiveinvestorindecidingwhetherornottoinvestintheREIT.Section10.Valuation.AfullvaluationofaREIT'sassetsshallbeconductedbyanindependentPropertyValuer,dulyaccreditedbytheCommission,atleastonceayear.NOvaluershallvaluethesameREITformorethanthree(3)consecutiveyears.Subjecttoacuring period of three (3) years, the REITmay, however, reengage the services of said property valuer. The Valuation Report,includingthestandardsofassetvaluationandvaluationmethodologyshallbedisclosedintheAnnualReportoftheREIT.Section 11.Records. All procedures and processes followed, and decisions made in relation to whether or not to invest in aparticularpropertyshallbefully,propertyandclearlydocumentedbytheREIT,theFundManagerandPropertyManager,asmaybeapplicable.Section12.ReportorialandDisclosureRequirements.12.1Requirements.TheREITshallcomplywiththereportorialanddisclosurerequirementsprescribedbytheCorporationCode,theSRCandtherelevantExchange.TheBIRshall likewisebefurnishedcopiesof thereportshereinprescribed.Attheminimum,theREITshalldisclosethefollowinginformationinitsAnnual,QuarterlyCurrentReport:

    a.MaterialContractsasdefinedunderRule3(v)b.BreachoftheborrowinglimitofREITandhowandwhentoaddresssaidbreachc.InvestmentofREITd.AproposedchangeintheFundManager,PropertyManager,ValuerorauditoroftheREIT,andthereasonsthereforee.ValuationoftherealestatepropertiesoftheREIT,includingthevaluationmethodologyusedthereforef.MaterialchangesintheincomestreamoftheREITg.MaterialchangesintheREIT'sfinancialforecasth.AnyfeereceivedbyanypartyrelatingtotheacquisitionordispositionoftherealestateoftheREITi.Givingorreceivinganoticeofintentiontoundertakeamerger,consolidation,jointventure,takeoverorspinoffinvolvingtheREITj.AnymodificationoftherightsoftheholdersofanyclasssecuritiesissuedbytheREITandthecorrespondingeffectofsuchmodificationupontherightsoftheholdersk.Anydeclarationofcashdividend,stockdividend.PropertydividendandpreemptiverightsbytheREITl.AppointmentofreceiverorliquidatorfortheREITm.Lossesorpotentiallosseswhichamounttoatleast(5%)ofthevalueoftheDepositedPropertyoftheREITn.Occurrenceofanyeventofdissolutionwithdetailsinrespecttheretoo.ActsoffactsthatmightseriouslyimpairthebusinessactivitiesoftheREITp.AnydevelopmentactivityundertakenbytheREIT,includingtheessentialdetailsthereofq.DirectandindirectownershipofdirectorsandPrincipalOfficersinthesecuritiesoftheREITr.AnyamendmenttotheConstitutiveDocumentsoftheREITs.AnymajorchangeinaccountingpolicyoftheREITandt.AnyplannedacquisitionofoutstandingsharesordispositionoftreasurysharesoftheREITu.Summaryofrealestatetransactionsenteredintoduringtheperiod, includingthe identityof theparties, thecontractpriceandtheirvaluations,includingthemethodsofvaluationv. Summary of the REIT's real estate assets, including the location of such assets, their purchase prices and the latestvaluations,rentalsreceivedandoccupancyratesand/ortheremainingtermsoftheREIT'sleaseholdpropertiesandw.ComparativesummarytothefinancialperformanceoftheREITforthesameperiods.

    12.2FailureofCompliance.Failuretocomplywithreportorialanddisclosurerequirementsshallsubject theREITtotheapplicablepenalties under the Securities Regulation Code and the rules of the relevant Exchange, without prejudice to the filling of theappropriateadministrative,civiland/orcriminalactionundertheREITActof2009orexistinglaws.

    Rule6FundManagerSection1.FundManager.AREITshallappointaFundManagerwhoshallbeindependentoftheREIT,itspromoter/sorsponsor/s.Section2.OrganizationandRequirements.AREITFundManagershallsubjecttothefollowingminimumrequirements:21.1 Itshallbe registeredcorporation: (I)duly licensedby theappropriatePhilippine regulatoryagencyengage in thebusinessoffundmanagement. If theFundManager isa trustentity, itshallbecoveredbyexistingBSPrulesandregulationsgoverning trustentitiesandregulationswhichtheBSPmayfromtimetotimeissue.(ii)withatleastathree(3)yeartrackrecordintheareaoffundmanagement,corporatefinance,orotherrelevantfinancerelatedfunctionsand(iii)aminimumpaiduporassignedcapital inthecaseof foreign corporation, ofOneHundredMillionPesos (Php100,000,000.00)or its equivalent in foreign currencywhich shallremainunimpairedatanygiventime,otherwise,anadditionalcapitalinfusionshallbemadewithinthree(3)workingdaysfromsuchimpairment(iv)withsufficienthuman,organizationalandtechnicalresourcesfortheproperperformanceofitsduties,includingtwo(2)responsibleofficersoratrustofficer,incaseofatrustentity,shallbeavailableatalltimestosupervisethebusinessoftheFundManager21.2ItsofficeinthePhilippinesshallhaveameaningfulroleinitsbusinessactivitiesandmustperformaccounting,complianceandinvestorrelationsservicesinthePhilippines21.3ItschiefexecutiveofficerortrustofficershallberesidentofthePhilippines,anditstwo(2)fulltimeandqualifiedprofessionalemployeesshallhaveatrackrecordandexperienceinfinancialmanagementaswellasexperienceintherealestateindustryforatleastfive(5)yearsSection3.FunctionsoftheFundManager.TheFundManagershallperformthefollowingfunctions.3.1 Implement the investment strategiesof theREITby: (I) determining theallocationof theDepositedProperty to theallowableinvestmentoutlets inaccordancewiththeREITPlanandtheinvestmentstrategyoftheREITand(ii)selectingincomegeneratingrealestateinaccordancewiththeinvestmentstrategyoftheREIT.NotwithstandingthewritteninstructionsoftheREIT,itshallbethefiduciaryresponsibilityoftheFundManagertoobjectivelyevaluatethedesiredinvestments,andformallyadvisetheREITofitsrecommendations,evenifcontrarytotheinstructions3.2 Oversee and coordinate the following activities: property acquisition leasing operational and financial reporting (includingoperatingbudgets)appraisalauditsmarketreviewaccountingandreportingprocedures,aswellasfinancingandassetdispositionplans

  • 3.3CauseavaluationofanyoftherealestateandotherpropertiesoftheREITtobecarriedoutbythePropertyValueronceayearwhenevertheFundManagerbelievesthatsuchvaluationisappropriate3.4Takeallnecessarymeasurestoensure:(i)thattheNetAssetperunitofaREITscalculatedasandwhenanannualvaluationreportisissuedbythePropertyValuerfortherelevantperiod,andthatsuchNetAssetValueperunitshallbedisclosedintheannualreports (ii) that the investment and borrowing limitations set out in the REIT Plan and the conditions under which REIT wasauthorizedarecompliedwith(iii)thatalltransactionscarriedoutbyoronbehalfoftheREITareconductedatarmslength(iv)thatall times aREIT has proper legal title to the real estate it owns, aswell as to the contracts. (such as property contracts, rentalagreements, jointventureor jointarrangementagreements,andanyotheragreements)entered intoonbehalfof theschemewithrespecttoitsassetsandthat(v)thatthepropertyManagerobtainsadequatepropertyinsurancefortherealpropertiesoftheREITfrominsurancecompaniesapprovedbytheFundManager.ItshalltakecustodyofallrelevantdocumentssupportingtheinsurancetakenonrealpropertiesoftheREIT.3.5Performallsuchfunctionsnecessarytoassetmanagement.Section4.MinimumDocumentaryRequirements.4.1ThearrangementbetweentheREITandtheFundManagershallbecoveredbythewrittendocumententeredintobytheparties,accompaniedbyaSecretary'sCertificateattestingtotheapprovalbytheboardofdirectorsoftheREIToftheappropriateresolutionsforthe:(i)appointmentoftheFundManager,(ii)theestablishmentoftheaccount,and(iii)designatedofsignatoriestotheaccount.4.2ThecontractbetweentheREITandtheFundManagershallcomplywiththedisclosureandotherrequirementsprescribedforRelatedPartyTransactions.Thearrangementbetween theREITand theFundManager shall be coveredbyawrittendocumentstatingthefollowing:

    a.titleornatureofcontractualagreementinnoticeableprintb.legalcapacities,innoticeableprint,ofpartiessoughttobecoveredc.purposesandobjectivesd.fundsand/orpropertiessubjectofthearrangemente.distributionofthefundsand/orpropertiesf.dutiesandpowersoftheFundManagerg.liabilitiesoftheFundManagerh.reportstotheREIT,Commission,BIRandExchangei.detailsofanycustodianshiparrangementj. terms, including period of engagement, termination of contractual arrangement and, in appropriate cases, provision forsuccessorFundManagerk.theexactamountorrateofthecompensationoftheFundManager,providedthattheamountoffeesthatshallbechargedto the REIT shall cover the fair and equitable share of the REIT in the total routine administrative expenses of the FundManagersuchassalariesandwages,supplies,credit investigation,collateralappraisal,security,messengerialandjanitorialservices,supervisionfeesimposedbytherelevantregulatoryagencyandinternalauditfees.However,theFundManagermaychargetheREITforspecialexpensesincasesuchexpensesare:(1)necessarytopreserveorenhancethevalueofthefund(2)payabletoanonrelatedthirdpartycoveredbyaseparatecontract,and(3)disclosedtotheREITshareholders.Provided,however,thatinnocaseshallthefeescollectedbytheFundManagerexceed1%ofthenetassetvalueoftheassetsundermanagementl.iftheFundManagerisatrustentity,astatementinnoticeableprinttotheeffectthatthefundsandpropertiesarenotcoveredbythePhilippineDepositInsuranceCorporationandthatlosses,ifany,shallbefortheaccountoftheREITandm.disclosurerequirementsfortransactionsrequiringpriorauthorityand/orspecificwritteninvestmentdirectivefromtheREIT,courtofcompetentjurisdictionorothercompetentauthority.

    4.3AcopyofthewrittenagreementshallbesubmittedtotheCommissiontogetherwiththeREITPlanandtheregistrationstatement,andshallbeavailableat theprincipalofficeof theREITand theFundManagerduring regularofficehours, for inspectionbyanyshareholderofrecordoftheREIT.Uponrequest,acopyofthewrittenagreementshallbefurnishedsuchshareholderofrecord,andthecostofreproductionshallbeathisownexpense.Section5.DegreeofCareandDiligence.TheFundManagershallobservethecareanddiligencerequiredundertheseRules,asfollows:5.1TheFundManagershalladministerandmanagetheassetsoftheREITwiththeskill,care,prudenceanddiligencenecessaryunder the circumstances then prevailing that a prudent man, acting in the same capacity and familiar with suchmatters, wouldexerciseintheconductofanenterpriseofalikecharacterandsimilaraims.5.2TheFundManagershallhavereasonableandadequatebasisforpreparingtheinvestmentrecommendation.5.3 The Fund Manager shall establish, maintain and implement written policies and procedures that ensure "best execution" oftrades. To show proof of best execution, the Fund Manager shall maintain records or quotes from two (2) alternate providers,wheneverapplicable,ordatafromanyreputablesourcethatcanbestprovideabasisfortheasset'sfairvalue.SuchrecordsshallbemadeavailabletotheCommissionuponrequest.5.4FundsorpropertiesofaREITmanagedbyaFundManagershallnotbecommingledwiththefundsofotherclients.5.5TheFundManagermayonlyoutsourceactivitiesconfinedtobackroom/accountingandsecuritiescustodianshiparrangements.5.6 When required under the Rules, the Fund Manager shall obtain the required approval for specific transactions prior to itsimplementation.5.7TheFundManagershallprovidetheREITwithfullandaccurateinformationinordertomakeaninformedinvestmentdecisionwhen approving a transaction or investment recommendation. The Fund Manager shall promptly transmit/relay to investors allmaterial factsnecessary for themtoprotect their interestwith theknowledgeoforreasonablydiscoverableby theFundManager,particularly,informationthatcouldenableclientstomakewellinformeddecisions.Section6.ConflictofInterest.6.1WhereaFundManagerhasamaterialinterestinatransactionwithorfortheREIT,orarelationshipwhichgivesrisetoanactualorpotentialconflictofinterestinrelationtosuchtransaction,itshallneitheradvise,nordealinrelationtothetransactionunlessithasdisclosed inwriting thatmaterial interestorconflict to theREITandhas takenall reasonablesteps toensure fair treatmentof theREIT.Itshallestablish,maintainandimplementwrittenpoliciesandproceduresonconflictofinterest,particularlytoidentifyanddealwithconflictsofinterestsituations.

  • 6.2 The Fund Manager shall establish, maintain and implement written policies and procedures to ensure that its research isindependent and impartial in order to provide a reasonable and adequate basis for making investment decisions and takinginvestmentaction.Section7.LendingandInvestmentDisposition.7.1Management of theFunds.Assets receivedby theFundManager shall beadministered in accordancewith the termsof thewritteninstrumentsignedbytheparties.7.2 InvestmentStrategy.Prior tomakingany investmentrecommendationsorcarryingoutany transactions fororonbehalfof theREIT, the Fund Manager shall establish and understand the investment objectives, instructions, risk profile and investmentrestrictionsoftheREIT.Forthispurpose,theREITshall,onanannualbasis,prepareathree(3)yearinvestmentstrategyconsistentwiththeREITPlancovering,amongothers,intendedpurchasesanddivestmentsofrealandotherproperties.TheREITshallsubmittheinvestmentstrategyforthesucceedingyearstotheFundManagerinOctoberofeachyear.7.3DiscretionaryPowers.WhentheFundManagerisgranteddiscretionarypowersintheinvestmentdispositionofREITfunds,andunless otherwise specifically enumerated in the agreement or indenture and directed in writing by the REIT, court of competentjurisdictionorothercompetentauthority,loansandinvestmentsofthefundshallbelimitedto:

    a.EvidenceofindebtednessoftheRepublicofthePhilippinesandanyotherevidenceofindebtednessorobligationstheservicingandrepaymentofwhicharefullyguaranteedbytheRepublicofthePhilippinesand

    b.LoansfullyguaranteedbytheRepublicofthePhilippinesastothepaymentofprincipalandinterest.Thespecificdirectivesrequiredunderthissubsectionshallconsistofthefollowing(i)thetransactiontobeenteredinto(ii)theparty'sname(iii)amountinvolvedand(iv)collateral,ifany.7.4TransactionsRequiringPriorAuthority.InadditiontorequirementsofRelatedPartyTransactionsasprovidedintheseRules,aFundManagershallnotundertakeanyofthefollowingtransactionsfortheaccountoftheREIT,unlesspriortoitsexecution,suchtransactionhasbeenfullydisclosedandspecificallyauthorizedinwritingorbyofficialelectroniccorrespondencebytheREIT,courtofcompetentjurisdictionorothercompetentauthority:

    a. Lend, sell, transfer or assign money or property to any of the departments, directors, officers, stockholders oremployeesof theFundManager or their relativeswithin the first degreeof consanguinity or affinity, or to the relatedinterestofsuchdirectors,officersandstockholders,or toanycorporationwhere theFundManagerownsat least fiftypercent(50%)ofthesubscribedcapitalorvotingstockinitsownsatleastfiftypercent(50%)ofthesubscribedcapitalorvotingstockoftheFundManager

    b. Purchase or acquire property or debt instruments from any of the departments, directors, officers, stockholders, oremployeesoftheFundManager,ortheirrelativeswithinthefirstdegreeofconsanguinityoraffinity,ortotherelatedinterestofsuchdirectors,officersandstockholders,orfromanycorporationwheretheFundManagerownsatleastfiftypercent(50%)ofthesubscribedcapitalorvotingstockinitsownrightandnotastrusteenorinarepresentativecapacityortoanycorporationwhichownsatleastfiftypercent(50%)ofthesubscribedcapitalorvotingstockoftheFundManagerc.Investinequitiesof,orinsecuritiesunderwrittenby,theFundManageroracorporationinwhichtheFundManagerownsatleastfiftypercent(50%)ofthesubscribedcapitalorvotingstockinitsownrightortoanycorporationwhichownsatleastfiftypercent(50%)ofthesubscribedcapitalorvotingstockoftheFundManagerd. Sell, transfer, assign, or lendmoney or property from onemanaged fund to another, except when the investment is inevidenceofindebtednessoftheRepublicofthePhilippinesorloansfullyguaranteedbytheRepublicofthePhilippinesastothepaymentofprincipalandinterest.

    Thedisclosurerequiredbythissubsectionshallconsistofthefollowingminimuminformation:(i)thetransactionstobeenteredinto(ii) identitiesof theparties involved in the transactionsand their relationships (iii)amount involvedand(iv)collateralsecurities, ifany.7.5FundsAwaitingInvestmentsorDistribution.FundsheldbytheFundManagerawaitinginvestmentordistributionshallnotbehelduninvestedorundistributedanylongerthanisreasonableforthepropermanagementoftheaccount.7.6OrderAllocation.

    a. The Fund Manager shall establish, maintain and implement policies and procedures to ensure fair and equitableallocationofordersamongitsclients,includingtheREIT.

    b.TheFundManagershallensure that theamountofcommissionormanagement feeearned fromanyparticularclientortransactionshallnotbethedeterminingfactorintheallocationoforders.c.WheretheFundManagerundertakesproprietarytrading,theFundManagershall,initsagreementwiththeREIT,discloseto the REIT the method of selection and determination of securities transacted for the proprietary accounts and client'saccounts.TheFundManagershallensurethat tradesarenotdirectedtobenefit itsproprietaryaccountsoranypreferentialclients and, for this purpose, shall establish information barriers or firewalls, closely supervise internal communication topreventflowofinformationandmaintaintheconfidentialityofpendingtransactionsandtheholdingsoftheREIT.Proprietaryordersshallbeconducted throughaseparate licensedrepresentativeof theFundManagerwhoshallnotbemanaging theREIT'sfunds.d.WheretheFundManagerispartofagroupofcompanies,whichundertakeotherfinancialorrealestate/propertyactivities,theFundManagershallensurethatthereisaneffectivesystemoffunctionalbarriers(firewalls)inplacetopreventtheflowofinformationthatmaybepricesensitiveormaterialandnonpublic,betweenthedifferentareasofoperations.e.TheFundManagershallestablish,maintainand implementwrittenpoliciesandprocedures toensure that the interestofRelatedPartiesshallnotsupersedetheinterestsoftheREIT.TheFundManagershalldisclosesuchpoliciestotheREIT.

    Section8.ProhibitiononInsiderTrading/MisuseofInformation8.1 The Fund Manager shall not effect or cause to be effected any transaction based on material nonpublic or price sensitiveinformation,orwhereprohibitedfromdealingbystatutoryrestrictionsoninsidertrading.8.2TheFundManagershallestablish,maintainandimplementwrittenpoliciesandprocedurestopreventthemisuseofmaterialnonpublic or price sensitive information relating to theREITbypersonshavingaccess to such information.TheFundManager shallensurethatpersonshavingaccesstosuchinformationareawareofsuchrestrictions.8.3TheFundManagershalldiscloseall interest insecuritiesasrequiredbyallapplicablestatutoryrequirementsandshallensurethatitsstaffisawareofsuchrequirements.Section9.ConfidentialityofInformation.9.1 The Fund Manager shall establish, maintain and implement written policies and procedures to ensure confidentiality ofinformationrelatingtothefundsandpropertiesoftheREIT.9.2AnyinformationrelatingtothefundsorpropertiesoftheREITshallnotbedisclosedtoathirdpartyoranunauthorizedperson,

  • unlessthereisalegalorregulatoryrequirementtodisclosesuchinformation.Section10.Reports.TheFundManagershallsubmitthefollowingreports:10.1The three (3)year investmentstrategypreparedby theREIT,whichshallbedue forsubmission to theCommissionand therelevantExchangeonorbeforeDecemberofeveryyear.10.2Quarterlywritten reporton theperformanceof theREIT's fundsandproperties,andof theappropriatebenchmarksshall besubmittedtotheREIT,theCommission,theBIRandtherelevantExchangewithinfortyfive(45)daysaftertheendofeachquarter.

    Rule7PropertyManagerSection1.PropertyManager.TheREITshallappointaPropertyManagerwhoshallbeindependentfromtheREIT,itspromoter/sorsponsor/s.APropertyManagershallbeconsideredindependentifitshallcomplywiththeFitandProperRuleashereindefined.Section2.MinimumQualifications.ThePropertyManagershallcomplywiththefollowingminimumqualifications:2.1Itshallpossesssufficienthuman,organizationalandtechnicalresourcesfortheproperperformanceofitsduties,includingtwo(2)responsibleofficerseachofwhomshallhaveatleastfive(5)yearstrackrecordinpropertyportfoliomanagement,andatleastone(1)oftheresponsibleofficersshallbeavailableatalltimestosupervisethebusinessofthePropertyManager,includingassetandpropertymanagement.2.2Itshallmaintainsatisfactoryinternalcontrolsandwrittencomplianceprocedures.2.3Itshallhavesufficientfinancialresourcesatitsdisposaltoenableittoconductitsbusinesseffectivelyandmeetitsliabilities.Section3.FunctionsofthePropertyManager.ThePropertyManagershallberesponsibleformanagingallaspectsoftherealestateownedbytheREIT.ThePropertyManagershallperformthefollowingfunctionsinaccordancewiththeREITPlanandtheinvestmentstrategyoftheREITincludingthefollowing:

    a.planthetenantmixandidentifypotentialb.formulateandimplementleasingstrategiesc.enforcetenancyconditionsd.ensurecompliancewithgovernmentregulationsinrespectoftherealestateundermanagemente. perform tenancy administrationwork, such asmanaging tenant occupancy and ancillary amenities, and negotiatingwithtenantsongrant,surrenderandrenewaloflease,rentreview,terminationandrelettingofpremisesf. conduct rental assessment, formulating tenancy terms, preparing tenancy agreements, rent collection and accounting,recoveryofarrearsandpossessiong. secureandadminister routinemanagementservices, includingsecuritycontrol, fireprecautions, communicationsystemsandemergencymanagementh.maintainandmanagethephysicalstructures/realpropertiesi.formulateandimplementpoliciesandprogramsinrespectofbuildingmanagement,maintenanceandimprovementandj.initiatingrefurbishmentandmonitoringsuchactivity.

    Section4.WrittenAgreement.4.1ThecontractbetweentheREITandthePropertyManagershallbecoveredbyawrittendocumententeredintobytheparties,accompaniedbyaSecretary'sCertificateattestingtotheapprovalbytheboardofdirectorsoftheREIToftheappropriateresolutionsfortheappointmentofthePropertyManager.4.2ThecontractbetweentheREITandthePropertyManagermustcomplywiththedisclosureandotherrequirementsprescribedforRelated Party Transactions and must be submitted to the Commission together with the REIT Plan registration statement. ThearrangementbetweentheREITandthePropertyManagershallbecoveredbyawrittendocumentstatingthefollowing:

    a.titleornatureofcontractualagreementinnoticeableprintb.legalcapacities,innoticeableprint,ofpartiessoughttobecoveredc.purposesandobjectivesd.realpropertiessubjectofthearrangemente.dutiesandpowersofthePropertyManagerf.liabilitiesofthePropertyManagerg.reportstotheREITh.termsincludingtheperiodofengagement,terminationofcontractualarrangementand,inappropriatecases,provisionforsuccessorPropertyManageri.theexactamountorratecompensationofthePropertyManager,providedthattheamountoffeesthatshallbechargedtotheREIT shall cover the fair and equitable share of theREIT in the total routine administrative expenses of the PropertyManager such as salaries andwages, supplies, appraisals, security,messengerial and janitorial services, supervision feesimposedbytherelevantregulatoryagencyandinternalauditfees.However,thePropertyManagermaychargetheREITforspecial expenses in case such expenses are: (1) necessary to preserve or enhance the value of the REIT's DepositedProperties (2)payable toa thirdpartycoveredbyaseparatecontract,and (3)disclosed toREIT'sstockholders.Provided,however, that innocaseshall the feescollectedby thePropertyManagerexceed1%of thenetassetvalueof theassetsundermanagementj.disclosurerequirementsfortransactionsrequiringpriorauthorityand/orspecificwritteninvestmentdirectivefromtheREIT,acourtofcompetentjurisdictionorothercompetentauthority.

    4.3AcopyofthecontractshallbesubmittedtotheCommissiontogetherwiththeREITPlanandtheregistrationstatement,andshallbeavailableattheprincipalofficeoftheREITandthePropertyManagerduringregularofficehoursforinspectionbyanyshareholderof record of theREIT.Upon request, a copy of thewritten agreement shall be furnished such shareholder of record, at his ownexpense.Section5.DegreeofCareandDiligence.ThePropertyManagershallobservethedegreeofcareanddiligenceprovidedintheserules,asfollows:5.1ThePropertyManagershallexercisediligenceandthoroughnessintheexerciseofitsfunctions.5.2ThePropertyManagershallbeliablefortheactsandomissionsofitsnomineesandagents.5.3ThePropertyManagershallobtainapprovalforspecifictransactionspriortoitsimplementation.

  • 5.4ThePropertyManagershallprovidetheREITwithfullandaccurateinformationinordertomakeaninformeddecisionregardingpropertymanagementmatters.5.5ThePropertyManagershallnotmakeanymisrepresentationinanypropertymanagementrecommendation.5.6PropertiesofaREITmanagedbyaPropertyManagershallnotbecommingledwiththepropertiesofotherclients.Section6.ConflictofInterest.6.1WhereaPropertyManagerhasamaterialinterestinatransactionwithorfortheREIT,orarelationshipwhichgivesrisetoanactualorpotentialconflictofinterestinrelationtosuchtransaction,itshallneitheradvise,nordealinrelationtothetransactionunlesshehasfullydisclosedthatmaterialinterestorconflicttotheREITandhastakenallreasonablestepstoensurefairtreatmentoftheREIT.6.2ThePropertyManagershallestablish,maintainandimplementpoliciesandprocedurestoensurefairandequitableallocationofresourcesamongitsclients,includingtheREIT.6.3 The PropertyManager shall ensure that the amount of commission ormanagement fee earned from any particular client ortransactionshallnotbethedeterminingfactorintheallocationofresources.6.4WherethePropertyManagerispartofagroupofcompanieswhichundertakerealestateactivities,thePropertyManagershallensurethatthereisaneffectivesystemoffunctionalbarriers(firewalls)inplacetopreventtheflowofinformationthatmaybepricesensitiveormaterialandnonpublicbetweenthedifferentareasofoperations.6.5 ThePropertyManager shall establish,maintain and implementwritten policies and procedures to ensure that the interest ofRelatedPartiesshallnotsupersedetheinterestsoftheREIT.ThePropertyManagershallfullydisclosesuchpoliciestotheREIT.Section7.ProhibitiononMisuseofInformation.ThePropertyManagershallestablish,maintainandimplementwrittenpoliciesandprocedurestopreventthemisuseofmaterialnonpublicorpricesensitiveinformationrelatingtotheREITbypersonshavingaccessto such information. The Property Manager shall ensure that persons having access to such information are aware of suchrestrictions.Section8.ConfidentialityofInformation.8.1 The Property Manager shall establish, maintain and implement written policies and procedures to ensure confidentiality ofinformationrelatingtothefundsandpropertiesoftheREIT.8.2Any information relating to thepropertiesor fundsof theREIT shall not bedisclosed toany thirdparty unauthorizedperson,unlessthereisalegalorregulatoryrequirementtodisclosesuchinformation.

    Rule8FitandProperRuleSection1.FitandProperRule.TomaintainthequalityofmanagementoftheREITandaffordbetterprotectiontoREITinvestors,theCommission,ortheconcernedregulatoryagency,shallprescribeorpassuponandreviewthequalificationsofindividualselectedorappointedasdirectorsofofficersoftheREIT,REITfundmanagers,REITpropertymanagers,distributorsandotherREITparticipantsanddisqualify those foundunfit.Theappropriateregulatoryagencymaydisqualify,suspendor removeanydirectororofficerwhocommitsoromitsanactwhichrendershimunfitfortheposition.Indeterminingwhetheranindividualisfitandpropertoholdtheposition,regardshallbegiventohisintegrity,experience,education,trainingandcompetence.Section2.Disqualifications.ThefollowingpersonsshallinnocasebeallowedtoserveoractasdirectorofofficerorconsultantofanyREIT,REITfundmanager,orREITpropertymanager:2.1Anypersonconvictedofanycrimeinvolvinganysecurityorfinancialproduct2.2Anypersonconvictedofanoffenseinvolvingfraudorembezzlement,theft,estafaorotherfraudulentactsortransactions2.3Anypersonwho,by reasonofanymisconduct, isenjoinedbyorder, judgment,ordecreebyanycourt,quasijudicialbodyoradministrative agency of competent jurisdiction from acting as a director, officer, employee, consultant, or agent occupying anyfiduciaryposition2.4Anypersonfoundbytheappropriateregulatoryagencytohaveviolated,oraided,abetted,counseled,commanded,induced,orprocured theviolationof thisAct, theCorporationCode, theGeneralBankingLaw, the InsuranceCode, theSecuritiesRegulationCode,oranyrelatedlawsandanyrules,regulationsorordersthereunder2.5Anypersonjudiciallydeclaredtobeinsolvent,orincapacitatedtocontractand2.6Anypersonfoundguiltybyaforeigncourt,regulatoryauthorityorgovernmentagencyoftheactsorviolationssimilartoanyoftheactsormisconductenumeratedintheforegoingparagraphs.A conviction in the first instance shall be considered sufficient ground for disqualification. Applicants shall submit the pertinentclearancerelativethereto.

    Rule9PropertyValuerSection1.AppointmentofanIndependentPropertyValuer.AREITshallappointadulyaccreditedindependentPropertyValuertoprepare a full valuation of a REIT's assets at least once a year in accordance with the applicable rules of asset valuation andvaluationmethodologyprescribedbytheCommission.Apropertyvaluershallnotbeconsideredindependentif

    a.itisthesubsidiaryorholdingcompanyof:i.theREIT

    ii.thePropertyManageriii.theFundManageriv.anyofthePrincipalStockholdersoftheREITorv. the holding company, Subsidiary or Affiliate of the PropertyManager, the FundManager, or any of the PrincipalShareholdersoftheREITor

    b.anyofitspartners,directorsorPrincipalOfficersisanofficer,directororanassociateof:i.theREIT

    ii.thePropertyManageriii.theFundManageriv.anyofthePrincipalShareholdersoftheREITorv.theholding,SubsidiaryorAffiliateofthePropertyManager,theFundManageroranyofitsPrincipalShareholdersor

  • c.anyofitsdirectorsorPrincipalOfficersholdsorcontrolstenpercent(10%)ormoreofthebeneficialinterestin,ortherighttovoteinthegoverningbodiesofanyoftheentitiesinb(i),b(ii),b(iii)orb(iv)ord. in casewhere theREIT intends to acquire or dispose of a property (the "subject property "), thePropertyValuer or itsassociate:

    i.isengaged,whetherasprincipaloragent,bytheREIT'scounterpartythatintendsorhasagreedtosellortopurchasefromtheREITthesubjectproperty,inrelationtotheintroductionorreferraloftheREITtothesubjectpropertyorviceversa

    ii.isengagedwhetherasprincipaloragentbytheREITinrelationtotheacquisitionofthesubjectpropertyiii.actsasabrokerfoethepropertytransactionforafeeoriv.had,atanytimeduringtheone(1)yearimmediatelybeforethedateoftheagreementforsuchintendedpurchaseordisposal,beenengagedtoprovidevaluationofthesubjectpropertytotheREIT'scounterparty(oritsRelatedParties).

    1.1 The Property Valuer shall ensure that its opinion and valuation is independent of and unaffected by its business orcommercialrelationshipwithotherpersons.1.2ThedirectionsandPrincipalOfficersofthePropertyValuershallcomplywiththeFitandProperRuleasdescribedundertheseRules.

    Section2.QualificationsRequiredofaPropertyValuer.a.TheappraisalcompanyshallberegisteredwiththeCommission

    b.ThecertifyingofficeroftheappraisalcompanyshallbeaprofessionalappraiserdulylicensedbytheDTIortheProfessionalRegulatory Board of Real Estate Service pursuant to R.A. 9646 and an officer/member of good standing any registeredassociationofappraisalcompaniesc.Atthetimeofapplicati0on,thecompanyshallhaveaminimumexperienceoffive(5)yearsintheappraisalbusinessd.Itshallhaveprofessionalservicesforatleastone(1)commercialbankandtwo(2)publiccompaniese. The appraisal company or any of its directors/officers shall have no adverse judgement on any administrative, civil orcriminalcaseinvolvingitsappraisalbusinessf.Itshallbesolventandinsoundfinancialcondition.

    Theforegoingqualificationsshallbesupportedbyappropriatedocuments.Section3.GeneralObligationsofaPropertyValuer.3.1ThePropertyValuershallvaluealltherealestateoftheREIT,onthebasisofafullvaluationwithphysicalinspectioninrespectofthesiteof the realestateandan inspectionof thebuilding(s)and facilitieserected thereononceayear,and inanyevent for thepurposes of issuance of new Investor Securities. TheProperty Valuer shall also produce a valuation report on real estate to beacquired or sold by the REIT or where new shares are offered by the REIT or in any other circumstances required by theCommission.ThecontentsofthevaluationreportshallcomplywiththeseRules.Section4.CriteriaforAcceptabilityofthePropertyValuer.4.1ThePropertyValuershallbeacompanythat:

    a.providespropertyvaluationservicesonaregularbasis.b.CarriesonthebusinessofvaluingrealestateinthePhilippinesc.PossessestherequisitelicensesrequiredunderrelevantPhilippinerulesandregulationsd.IsaccreditedbytheCommissione.Haskeypersonnelwhopossesstherequisitelicensesandarequalifiedtoperformpropertyvaluationsf.Hassufficientfinancialresourcesatitsdisposaltoenableittoconductitsbusinesseffectivelyandmeetitsliabilitiesg.Hasrobustinternalcontrolsandchecksandbalancestoensuretheintegrityofvaluationreportsandthatthesereportsareproperlyandprofessionallypreparedinaccordancewithinternationalbestpracticesh.Hasadequateprofessionalinsurancetocoveritsusualrisksandi.ComplieswiththeFitandProperRuleundertheseRules.

    Section5.ValuationReport.5.1ThePropertyValuershallproduceavaluationreportwhichshallinclude,asaminimum:

    a.allmaterialdetailsinrelationtothebasisofvaluationandtheassumptionsusedb.descriptionandexplanationofthevaluationmethodologiesadoptedc.overallstructureandconditionoftherelevantmarketincludingananalysisofthesupply/demandsituation,themarkettrendandinvestmentactivitiesd.theparticularsinrespectofeachproperty,suchas:

    i.anaddresssufficienttoidentitytheproperty,whichshallgenerallyincludepostaladdress,lotnumberandsuchfurtherdesignationasisregisteredwiththeappropriategovernmentauthorities

    ii.thenatureoftheinteresttheREITholdsintheproperty(e.g.ifitisafreeholdorleasehold,andtheremainderofthetermifitisaleasehold)iii.theexistinguse(e.g.shops,offices,factories,residential,etc.)iv.abriefdescriptionof theproperty,suchas theageof thebuildingthesitearea,grossfloorarea,net lettable floorarea,andthecurrentzoningusev.theoptionsorrightsofpreemptionandotherencumbrancesconcerningoraffectingthepropertyvi.theoccupancyratevii.leasecycledurationviii.leaseexpiryprofileix.asummaryoftermsofanysubleaseortenancies,includingrepairobligation,grantedtothetenantsofthepropertyx.thecapitalvalueinexistingstateatthedatethevaluationwasperformed

  • xi. theexistingmonthly rental beforeprofile tax if theproperty iswhollyorpartly let togetherwith theamountandadescriptionof anyoutgoingsor disbursements from the rent, and, ifmaterially different , theestimateddifferent, theestimatedcurrentmonthlymarketrentalobtainable,onthebasisthatthepropertywasavailabletoletontheeffectivedateasatwhichthepropertywasvaluedxii.theestimatedcurrentnetyieldxiii.asummaryofanyrentreviewprovisions,wherematerialxiv.theamountofvacantspace,wherematerialxv.materialinformationregardingthetitleofthesubjectpropertyascontainedintherelevantopinion,andadiscussionas to whether any and how the legal opinions have been taken into consideration in the valuation of the relevantpropertyandxvi.anyothermatterswhichmayaffectthepropertyoritsvalue.

    e.particulars[assetoutin(c)]ofanyrealestateforwhichtheREIThasanoptiontopurchase.f. A letter starting the independent status of the Property Valuer and that the valuation report is prepared on a fair andunbiasedbasisg.Anexplanationoftherationaleforchoosingtheparticularvaluationmethod,ifmorethanonemethodisadopted.

    5.2WheneveravaluationreportispreparedfortheREIT,thedateofthevaluationreportshallbe:a.thedatetheREITisvalued,ifsuchreportispreparedforthepurposeofcalculatingtheNetAssetValueoftheREITor

    b.thedatewhichisnotmorethanthree(3)monthsbeforethedateonwhich(i)anofferingdocumentisissuedor(ii)asaleandpurchaseagreement(orotheragreementtotransferlegaltitle)issigned,ifthetransactiondoesnotrequireshareholdersapproval.

    Section6.TerminationoftheServicesofaPropertyValuer.6.1TheservicesofthePropertyValuershallbeterminatedafterithasconductedvaluationsoftherealestateoftheREITforthree(3)consecutiveyears.Subjecttoacuringperiodofthree(3)years,theREITmay,however,reengagetheservicesofsaidpropertyvaluer.6.2ThePropertyValuershallbesubjecttoremovalbynoticeinwritingfromtheREITinanyofthefollowingevents:

    a.thePropertyValuergoesintoliquidation,becomesbankruptorhasareceiverappointedoveritsassistsb.forgoodandsufficientreasontheFundManagerstatesinwritingthatachangeinthePropertyValuerisdesirableintheinterestoftheREITshareholdersorc.thePropertyValuerviolatestheseRulesoranyotherrelevantlaw,ruleorregulation.

    6.3Inaddition,theservicesofthePropertyvaluershallbeterminatedinallothercasesprovidedforintheConstitutiveDocuments.6.4UpontheterminationordismissalofthePropertyValuer,theREITshallappointnewPropertyValuerthatmeetsthequalificationrequirementsundertheseRules.

    Rule10TaxesSection1.IncomeTaxationofREIT's.AREITshallbesubjecttoincometaxunderChapterIV.TitleIIoftheNIRC,asamended,onitsTaxableNetIncomeasdefinedintheAct:Provided,ThatinnocaseshallaREITbesubjecttoaminimumcorporateincometax,asprovidedunderSection27(E)ofthesameCodeProvided, further, That for purpose of computing the taxable net income of a REIT, dividends distributed by a REIT from itsdistributableincomeasoftheendofthetaxableyearandonorbeforethelastdayofthefifth(5th)monthfollowingthecloseofthetaxableyearshallbeconsideredaspaidonthelastdayofsuchtaxableyear.However,aREITshallbesubjecttoincometaxonitstaxablenetincomeasdefinedinChapterIV,TitleIIoftheNIRC,asamended,insteadofitstaxablenetincomeasdefinedinthisact,upontheoccurrenceofanyofthefollowingevents:

    a)Failuretomaintainitsstatusasapubliccompanyasdefineshereinb)FailuretomaintainthelistedstatusoftheinvestorsecuritiesontheExchangeandtheregistrationoftheinvestorsecuritiesbytheCommissionand/orc)Failuretodistributeatleastninety(90%)percentofitsDistributableIncomeasrequiredherein.

    The above events, however, shall be subject to a Thirty (30) day curing period from the time of the occurrence of the event.Compliance by the REIT within the curing period shall be determined by the Commission and such determination shall beimmediatelycommunicatedtotheBIR.Section2.CreditableWithholdingTax. Income payments to aREIT shall be subject to a creditablewithholding tax of one (1%)percent.Section3.TaxonTransferofPropertybyREIT.AnysaleortransferofrealpropertytoaREIT,includingthesaleortransferofanyandallsecurityinteresttheretoshallbesubjecttofifty(50%)percentoftheapplicableDSTimposedundertitleVIIoftheNIRC.All applicable registration and annotation fees relative or incidental thereto shall be fifty (50%) of the applicable registration andannotationfees.TheincentivesprovidedhereincanavailedbyanunlistedREITprovideditislistedwithanExchangewithintwo(2)yearsfromtheinitialavailmentoftheincentives.The fifty (50%)percentof theapplicableDSTshallbedueanddemandable togetherwith theapplicablesurchargepenaltiesandinterestreckonedfromthedatesuchtaxshouldhavebeenpaidupontheoccurrenceofanyofthefollowingevents:

    a.FailuretolistwithanExchangewithinaperiodtwo(2)yearsfromthedateofinitialavailmentb.FailuretomaintainitsstatusaspubliccompanyasdefinedintheActc.FailuretomaintainthelistedstatusoftheInvestorSecuritiesontheExchangeandtheregistrationoftheinvestorsecuritieswiththeCommissionand/ord.Failuretodistributeatleastninety(90%)ofitsDistributableIncomerequiredundertheAct.

    The above events, however, shall be subject to a thirty (30) day curing period from the time of the occurrence of the event.Compliance by the REIT within the curing period shall be determined by the Commission and such determination shall beimmediatelycommunicatedtotheBIR.Section4.IssuanceandTransferofInvestorSecurities.

  • a.TheoriginalissuanceofInvestorsecuritiesshallbesubjecttoDSTundertheNIRC,asamendedb.Anysale,barter,exchangeorotherdispositionoflistedInvestorSecuritiesthroughtheExchange,includingblocksalesorcrosssaleswithpriorapprovalfromtheExchangeshallbesubjecttothestocktransactiontaximposedundertheNIRCc.Anysale,barter,exchangeorotherdispositionoflistedInvestorSecuritiesthroughtheExchange,includingcrossorblocksaleswithpriorapprovalfromtheExchangeshallbeexemptfromtheDSTprescribedbytheNIRCandd.AnyinitialpublicandsecondaryofferingofinvestorsecuritiesshallbeexemptfromtheIPOtaximposedundertheNIRC.

    Section5.DividendsPaidbyREITs.CashorpropertydividendspaidbyaREITshallbesubject toa final tax tenpercent (10%)unless

    a. the dividends are received by a nonresident individual or a nonresident foreign corporation entitled to claim apreferentialwithholdingtaxrateoflessthantenpercent(10%)percentpursuanttoanapplicabletaxtreatyor

    b.thedividendsarereceivedbyadomesticcorporationorresidentforeigncorporationOverseas Filipino investors are exempt from the dividends tax for seven (7) years from the effectivity of the tax regulationsimplementingtheAct.Section6.VATonGrossSalesorGrossReceiptsofREITs.

    a.Thegross sales fromanydisposal of real propertyor gross receipts from the rental of such real property shall besubjecttoVAT

    b.AREITshallnotbeconsideredasadealerofsecuritiesandshallnotbesubjecttoVATonitssale,exchangeortransferofsecuritiesformingpartofitsrealestaterelatedassets.

    Section7.GeneralApplicationof theNIRC.Unlessotherwiseprovidedunder theAct, the internal revenue taxesunder theNIRCshallapply.Section8.Delistingof theREITandRevocationof Tax Incentives. The tax incentives granted under theAct shall be ipso factorevoked and withdrawn as of the date of the delisting becomes final and executory in the event the REIT is delisted from theExchangewhethervoluntaryorinvoluntaryforfailuretocomplywiththeprovisionsoftheActoranyoftheseRules.AnytaxincentivethathasbeenavailedofbytheREITthereaftershallberefundedtotheGovernmentwithinninety(90)daysfromthedatewhenthedelistingbecomesfinalandexecutoryandthesurchargeandpenaltyshallapply.ThisshallbewithoutprejudicetothepenaltiestobeimposedbytheBIR.IfthedelistingisforcauseshighlyprejudicialtotheinterestoftheinvestingpublicsuchasviolationofthedisclosureandrelatedpartytransactionsoftheActorinsolvencyoftheREITduetomismanagementormisappropriation,conversion,wastageordissipationofitscorporateassets,theresponsiblepersonsshallrefundtoitsinvestorsatthetimeoffinaldelistingthebookvalue/acquisitioncostoftheirshares.

    Rule12MiscellaneousProvisionsSection1.CorporateGovernance. The PropertyManager and the FundManager shall be subject to the principles of corporategovernanceadoptedbytheCommission.Section2.SupplementalRegulations.TheserulesmybesupplementedbyrelevantregulationswhichtheCommission,Exchange,BIRandBSPmayfromtimetotimeissue.Section3.UseofRegistrationFees.Tocarryout thepurposesof theseRules, theCommissionshall retainanduse fiftypercent(50%)ofallfeespaidtoitrelativetotheestablishmentofREITsandtheregistrationoftheirsecuritiesinadditiontoitsannualbudget.Section4.SeparabilityClause.If,foranyreason,anyarticleorprovisionoftheseRulesoranyportionthereoforapplicationofsucharticle, provision or portion thereof to any person, group or circumstance is declared invalid or unconstitutional, the remainder oftheseRulesshallnotbeaffectedbysuchdecision.Section5.RepealingClause.Allotherrulesandregulationsorpartsthereof,inconsistentwiththeforegoingrulesandregulationsarerepealed,amendedormodifiedaccordingly.Section6.EffectivityClause.TheseRulesshalltakeeffectfifteen(15)daysafteritscompletepublicationintheOfficialGazetteorinatleasttwo(2)newspapersofgeneralcirculationinthePhilippines.