[Table of Contents and Introduction / Salient Points; Rules 1-3; Rule 4; Rule 5; Rule 6; Rule 7; Rule 8; Rule 9; Rules 10-11]
Rule 7 – Property Manager
SEC. 1. Property Manager. A REIT shall appoint a Property Manager who shall be independent of the REIT, its promoter/s or sponsor/s. To ensure independence of the property manager from the REIT, the following shall be complied with:
1.1 Majority of the members of the board of the REIT property manager must be independent directors, at least two (2) of whom must have working knowledge of the real estate industry; and
1.2. The directors (including the independent directors) of the REIT and its Sponsors/Promoters cannot occupy more than 49% of the board of directors of the property manager.
SEC. 2. Independence. A REIT Property Manager must comply with the requirements on the number of independent directors, as provided under Sec. 1 hereof and under relevant law or appropriate regulatory authority, such as but not limited to pertinent provisions of the SRC and the Revised Code of Corporate Governance;
2.1 The qualifications and disqualifications of the directors of the Property Manager must comply with the provisions of the Revised Code of Corporate Governance and the fit and proper rule prescribed in this IRR.
2.2 Must comply with the additional requirements or qualifications for a Property Manager in accordance with the Fit and Proper Rule, the Revised Code of Corporate Governance, and such relevant regulations, which the Commission may prescribe from time to time.
SEC. 3. Minimum Qualifications. A REIT Property Manager shall comply with the following minimum qualifications:
3.1 It must employ either a real estate consultant, real estate appraiser, or a real estate assessor, who must be subject to compliance with relevant laws.
3.2 It shall possess sufficient human, organizational and technical resources for the proper performance of its duties, including two (2) responsible officers each of whom shall have at least three (3) years track record in property portfolio management, and at least one (1) of the responsible officers shall be available at all times to supervise the business of the Property Manager, including asset and property management.
3.3 It shall maintain satisfactory internal controls and written compliance procedures.
3.4 It shall have sufficient financial resources at its disposal to enable it to conduct its business effectively and meet its liabilities.
SEC. 4. Functions of the Property Manager. The Property Manager shall be responsible for managing all aspects of the real estate owned by the REIT. The Property Manager shall perform the following functions in accordance with the REIT Plan and the investment strategy of the REIT including the following:
a. plan the tenant mix and identify potential tenants;
b. formulate and implement leasing strategies;
c. enforce tenancy conditions;
d. ensure compliance with government regulations in respect of the real estate under management;
e. perform tenancy administration work, such as managing tenant occupancy and ancillary amenities, and negotiating with tenants on grant, surrender and renewal of lease, rent review, termination and re-letting of premises;
f. conduct rental assessment, formulating tenancy terms, preparing tenancy agreements, rent collection and accounting recovery of arrears and possession;
g. secure and administer routine management services, including security control, fire precautions, communication systems and emergency management;
h. maintain and manage the physical structures/real properties;
i. formulate and implement policies and programs in respect of building management, maintenance and improvement;
j. initiating refurbishment and monitoring such activity; and
k. all such functions necessary and incidental to property management.
SEC. 5. Written Agreement
5.1 The contract between the REIT and the Property Manager shall be covered by a written document entered into by the parties, accompanied by a Secretary’s Certificate attesting to the approval by the board of directors of the REIT of the appropriate resolutions for the appointment of the Property Manager.
5.2 The contract between the REIT and the Property Manager must comply with the disclosure and other requirements prescribed for Related Party Transactions and must be submitted to the Commission together with the REIT Plan and registration statement. The arrangement between the REIT and the Property Manager shall be covered by a written document stating the following:
- a. title or nature of contractual agreement in noticeable print;
- b. legal capacities, in noticeable print, of parties sought to be covered;
- c. purposes and objectives;
- d. real properties subject of the arrangement;
- e. duties and powers of the Property Manager;
- f. liabilities of the Property Manager;
- g. reports to the REIT;
- h. terms including the period of engagement, termination of contractual arrangement and, in appropriate cases, provision for successor Property Manager;
- i. the exact amount or rate of the compensation of the Property Manager, provided that the amount of fees that shall be charged to the REIT shall cover the fair and equitable share of the REIT in the total routine administrative expenses of the Property Manager such as salaries and wages, supplies, appraisals, security, messengerial and janitorial services, supervision fees imposed by the relevant regulatory agency and internal audit fees. However, the Property Manager may charge the REIT for special expenses in case such expenses are: (1) necessary to preserve or enhance the value of the REIT’s Deposited Properties; (2) payable to a third party covered by a separate contract, and (3) disclosed to REIT’s stockholders. Provided, however, that in no case shall the fees collected by the Property Manager exceed 1% of the net asset value of the assets under management;
j. disclosure requirements for transactions requiring prior authority and/or specific written investment directive from the REIT, a court of competent jurisdiction or other competent authority.
5.3 A copy of the contract shall be submitted to the Commission together with the REIT Plan and the registration statement, and shall be available at the principal office of the REIT and the Property Manager during regular office hours for inspection by any shareholder of record of the REIT. Upon request, a copy of the written agreement shall be furnished such shareholder of record, at his own expense.
SEC. 6. Degree of Care and Diligence. The Property Manager shall observe the degree of care and diligence provided in these rules, as follows:
6.1 The Property Manager shall exercise diligence and thoroughness in the exercise of its functions.
6.2 The Property Manager shall be liable for the acts and omissions of its nominees and agents.
6.3 The Property Manager shall obtain approval for specific transactions prior to its implementation.
6.4 The Property Manager shall provide the REIT with full and accurate information in order to make an informed decision regarding property management matters.
6.5 The Properly Manager shall not make any misrepresentation in any property management recommendation.
6.6 Properties of a REIT managed by a Property Manager shall not be commingled with the properties of other clients.
SEC. 7. Conflict of Interest.
7.1 Where a Property Manager has a material interest in a transaction with or for the REIT, or a relationship which gives rise to an actual or potential conflict of interest in relation to such transaction, it shall neither advise, nor deal in relation to the transaction unless he has fully disclosed that material interest or conflict to the REIT and has taken all reasonable steps to ensure fair treatment of the REIT.
7.2 The Property Manager shall establish, maintain and implement policies and procedures to ensure fair and equitable allocation of resources among its clients, including the REIT.
7.3 The Property Manager shall ensure that the amount of commission or management fee earned from any particular client or transaction shall not be the determining factor in the allocation of resources.
7.4 Where the Property Manager is part of a group of companies which undertake real estate activities, the Property Manager shall ensure that there is an effective system of functional barriers (firewalls) in place to prevent the flow of information that may be price sensitive or material and non-public between the different areas of operations.
7.5 The Property Manager shall establish, maintain and implement written policies and procedures to ensure that the interest of Related Parties shall not supersede the interests of the REIT. The Property Manager shall fully disclose such policies to the
7.5 The Property Manager shall establish, maintain and implement written policies and procedure to ensure that the interest of Related Parties shall not supersede the interests of the REIT. The Property Manager shall fully disclose such policies to the REIT.
SEC. 8. Prohibition on Misuse of Information. The Property Manager shall establish, maintain and implement written policies and procedures to prevent the misuse of material non-public or price sensitive information relating to the REIT by persons having access to such information.
The Property Manager shall ensure that persons having access to such information are aware of such restrictions.
SEC. 9. Confidentiality of Information.
9.1 The Property Manager shall establish, maintain and implement written policies and procedures to ensure confidentiality of information relating to the funds and properties of the REIT.
9.2 Any information relating to the properties or funds of the REIT shall not be disclosed to any third party or unauthorized person, unless there is a legal or regulatory requirement to disclose such information.
[Table of Contents; Rules 1-3; Rule 4; Rule 5; Rule 6; Rule 7; Rule 8; Rule 9; Rules 10-11]