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Let’s go REIT

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Fil C. Sionil

Fil C. Sionil

On Monday, this chronicler joined a group of opinion writers/columnists in a round-table discussion on the newest financial investment instrument on the block, the Real Estate Investment Trust (REIT).

Secretary of Finance Carlos “Sonny” Dominguez was in high spirits as he entered the function room on the seventh floor of the newly retrofitted Department of Finance (DOF) building. He came in relatively unnoticed as our designated seats, with our back at the entrance, faced the bay window. We had a view of the beautiful expanse of Manila Bay horizon.

Secretary Sonny was proud of the renovations. “Have you seen our gym,” he asked. He ushered us to the nearby room full of expensive health wellness equipment. The discourse on the benefit analysis of REIT was at its interesting phase, when SecFin declared a five-minute ceasefire for his guests to savor the beauty of the famous Manila Bay sunset.

During the exchanges, he said, he waited for 40 long years before rice tariffication became a law last year. Back in 1989 during President Corazon C. Aquino’s administration, SecFin Sonny was wearing the agriculture portfolio hat. I was beaten 40 years ago.”

The investment potentials for this newest financial instrument on the market block are immense both from the perspective of investors and the real estate firms. The government will benefit as well, since one of the conditionalities include that the funding raised must be invested in the country, including infrastructure.

REIT can enhance further the development of the country’s capital market as it widens investors profile by getting into fold first-generation overseas Filipino workers (OFWs), who are already done sending their children to school, building their dream abode, and have extra money for investment.

BDO Chief market analyst Jonas Ravelas said it is a “timely investment instrument” for moneyed OFWs as well as those with extra income to spare. The yield could even be better than placing funds in time deposit due to the current low-interest-rate regime and monetary easing and further reduction in reserve requirements remain a possibility.

For real property developers and owners, the cliché “have your cake and eat it, too” is applicable. This is relative to the incentive provided in the law that allows property owners and/or developers to package their fixed assets into REIT, and list in the stock market. It’s a fund-raising activity and, at the same time, an avenue for the developers to “mark-to-market” their real estate assets.

While the Philippine Stock Exchange awaits the maiden REIT public offering, I believed concerned agencies should now prepare to embark on a campaign, going around the countryside to attract prospective investors.

*****

Help update: Assistance to hundreds of families victimized by the eruption of Taal Volcano keeps pouring in. Bank of the Philippine Islands (BPI) is giving its clients, whose families and businesses were severely affected by the Taal eruption, time flexibility to settle their monthly obligation, initially for 30 days without penalties and accrued interest. The delay in payments includes their credit card liabilities.

San Miguel Corporation, its subsidiaries, and affiliates mobilized their resources to assist in the on going relief efforts. On top of the millions of pesos worth of relief items, the conglomerate said its “civic-minded employees “have given their time and resources to our own relief efforts.”

Victory Liner donated a bus that Rotary District 3830 converted into a soup kitchen to cook hot meals for residents of the affected communities. And the Manila Bulletin management extended its helping hand Sunday to the families in areas hit by the fury of Taal. As of this writing she seems to be in an eerie silent mood. It’s a dangerous lull before another disruptive eruption occurs.

These are not just one-time activities. According to San Miguel President Ramon Ang, “We’re committed to continue helping our countrymen and doing more for them.”

Salute!

Talkback to me at sionil731@gmail.com

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