10 firms ‘serious’ about holding REIT offers

Written by Miguel R. Camus / Reporter

Monday, 10 May 2010 21:49

IT seems that 2010 is shaping up to be a very good year in terms of initial public offerings (IPOs) with the implementation of the Real Estate Investment Trust (REIT) act providing the momentum. PSE chief operating officer Val Suarez told the BusinessMirror last week that at least 10 firms have already expressed a “serious” interest to hold REIT offers after the final rules are out this month. In line with this, Suarez said the bourse could release its own REIT listing guidelines this Wednesday. “But the PSE board has to sign on this first, [as] we need to see the final rules. Basically, it will have all the requirements needed for an IPO. We will try to make it as issuer-friendly as possible,” said the stock-exchange executive. After receiving comments for the draft implementing rules of the REIT law on April 26, the Securities and Exchange Commission (SEC) may come out with the much-awaited final rules this week. In a text message, SEC Commissioner Juanita Cueto said the final REIT rules will be part of its en banc session to be continued today. The rules will also need to be approved by the Bureau of Internal Revenue. The REIT law will allow property firms to publicly list their income-generating assets such as apartments, shopping malls and office buildings, providing these companies with an additional funding source. Individual investors may then buy into these REIT firms, which will be listed on PSE and registered with the SEC. REITs, which are required to pay out 90 percent of their distributable income annually as dividends, may also qualify for tax incentives and lower fees. Suarez said the REIT listing guidelines will be in line with those approved by the SEC. According to the original draft, a REIT company needs to have a minimum capitalization of P300 million. It should also have at least 1,000 shareholders owning at least 50 shares equivalent to at least a third of the REIT’s capital stock. Independent directors should also occupy at least one-third or two seats on the board of the REIT firm, whichever is higher. The REIT shall engage a fund and property manager. A number of large-property developers have already been preparing for the final rules of the REIT law. The largest REIT offer announced so far was $600 million that SM Prime Holdings Inc expects to raise. Ayala Land Inc. is eying to raise about $300 million, while Gokongwei-led Robinsons Land Corp. last week said it plans to be an early player in the REIT industry. Andrew Tan-led Megaworld Corp. is reportedly awaiting the final REIT rules, as well. The PSE operates the only stock exchange in the Philippines with 250 listed companies and 132 operating trading participants.