More firms setting up REITs

“More and more property companies have expressed their interest in doing their Real Estate Investment Trust (REIT) offerings.”

By Iris Gonzales

The Philippine Star

MANILA, Philippines – More and more companies are expressing interest to set up their respective REIT entities on the back of the Duterte administration’s plan to revive the implementation of the investment measure that has the potential to deepen the country’s capital market.

Upscale property developer Century Properties Inc. has expressed interest to set up its own REIT or Real Estate Investment Trust companies.

Under the Philippine REIT law, property developers can raise funds by selling assets with recurring revenues. This would be done by transferring those assets in a special purpose vehicle that should be listed on the Philippine Stock Exchange, giving investors the option to invest directly in the finished product and not just in the property developer.

“The REIT is one of the reasons why we are beefing our our leasing asset base,” said Century Properties chairman Jose E.B. Antonio.

 He believes that this time, the stalled measure would finally be implemented.

“Chances are it will happen and it’s just a matter of when. It’s also just a question of the implementing rules and regulations because we already have the law. It’s just a matter of implementing it,” he said.

Antonio said the main highlights of the REIT law, which is actually being contested by the proponents and also by the legislators, is that they want the control to be in public hands instead of the proponent.

Another issue is the tax friction.

He expressed hopes that these issues would be finally be resolved under the Duterte administration.

“We will benefit from this because you are providing liquidity for an otherwise long-term asset. Let’s say a P100 million asset, you can raise at least a P40 million from the P100 million by floating it,” Antonio said.

Other property companies such as Megaworld, Ayala Land Inc. and the SM Group have also previously expressed their interest in doing their REIT offerings.

The Securities and Exchange Commission (SEC), is now reviewing the implementing rules and regulations and is looking at a more amenable minimum public float for REIT companies of anywhere from 33 percent to 43 percent.

“We just have to decide on a number that is both okay with (the private sector and the regulator). Our job is to democratize it. So we are just thinking what would be ideal for both the public and private sector. You also have to consider market conditions at this time. We are looking at 33 to 43 (percent),” SEC chairperson Teresita Herbosa has said.

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