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Developers hope for REIT revival

by June 19, 2016 General

The country’s major property developers are hoping that the next administration will revive the Real Estate Investment Trust (REIT) in a bid to attract more investments into the property market and spur economic activity.
SM Prime Holdings Inc. president Hans Sy said the property conglomerate is interested to launch a REIT, noting it is one area that can help it to expand further as well as benefit the public.
The REIT Act lapsed into law in 2009 but was stalled by issues on ownership and tight taxation framework. It is mainly aimed at promoting the development of the country’s capital market thus expanding the participation of the public in the ownership of real estate.
“We are very confident we will be able to draw in foreign investors also. Look at the success of Singapore. So we believe we can replicate that,” he said in an interview on the sidelines of the award for 19th Outstanding Filipino Retailers and Shopping Centers of the Year organized by Philippine Retailers Association.
Sy said they are amenable to allowing 30-40 percent foreign ownership on the REIT management company.
“If you go as much as 70 percent, I think you will have some serious problem. The success of this kind of business, you have to have a control to move forward. We can’t be too democratic about this type of business… 70 (percent) is huge controlment, you’ll be minority,” he added.
Apart from reviving the REIT, Sy also expects that the incoming Duterte administration will accelerate spending on infrastructure.
“We will focus on expanding if they can support us with the infrastructure. (But) I don’t really want to say we’re expecting a lot, but I believe everybody has to do their share,” he said.
SM Prime has interests in shopping malls, residential condominiums and commercial office buildings, in addition to resorts, leisure projects as well as hotels and convention facilities.
It has earmarked P60 billion annually for the next three years to sustain its developmental goals.
For his part, Megaworld Corp. executive director Kingson Sian believed that the amendment of REIT can attract capital into the property sector and generate more economic activity.
“…If you can get the REIT amended in a form that is acceptable to issuers and funders, investors, that’s gonna unleash a lot of capital, which can then be redeployed for construction of new projects which has a multiplier effect. That’s huge,” he told reporters.
Sian said this will accelerate developments in the country’s property market, noting generating economic activities can benefit more Filipinos.
“We will be interested to look at it of course. And I’m sure our peers will be interested to look at it (also),” he added.
Sian said the government needs to look at issues on ownership and tax rules, and make necessary amendments to the law’s implementing rules and regulations.
“There’s already REIT legislation around the region and you can already compare legislation that work and those that do not work. So hopefully, they will follow those that work so that it can take off,” he added.
Januario Jesus Atencio, president and chief executive officer of mass housing developer 8990 Holdings Inc., said the REIT law will benefit the leasing sector particularly the commercial buildings such as malls.
“If you are able to relax the REIT especially in the definition of how taxes can be cascaded towards the buyers of the REIT, then the developers who actually do commercial buildings will get their cash flows sooner so they can continue building,” he said in an earlier interview.
8990 Holdings is building malls as amenities to attract markets for its housing projects in Tondo, Manila and in Ortigas Avenue Extension.
The Philippine Stock Exchange earlier said it would push to the next administration for amendment to the REIT law.