The Senate on Monday has approved on third reading a bill which seeks to institutionalize Real Estate Investment Trusts (REIT).

Authored by Sen. Edgardo Angara, the bill allows for the establishment of a corporation for the purpose of owning income-generating real estate assets and real estate-related assets, whose shares of stock will be made accessible to small and large investors alike.

The bill will also help develop the country's infrastructure system, boost tourism, and address the growing need for office spaces, especially with the growth of the business process outsourcing industy.

“The approval by the Senate of the bill brings the country a step closer to putting in place a system that will significantly enable ordinary Filipinos to share in the ownership of income-generating real estate,” commented Philippine Stock Exchange President Francis Lim.

The bill requires REITs to distribute at least 90 percent of its distributable income to its shareholders. It must also be owned at least 30 percent by the investing public.

“The proposed law mandates the listing of these stocks in a stock exchange to enable the general public to participate, through equity ownership in the REIC and enjoy a stable source of dividend income," Lim said.

REIT markets in Asia have shown strong growth potential with their combined market capitalization of $68.3 billion last year from only $46 billion in 2006.

Likewise, the total contribution of Asian REITs to the global REIT market capitalization grew 11.3 percent last year from 7.6 percent in 2006. As of 2008, the number of REITs in Asia represent almost one-fifth of the total REIT companies across the globe.