DOF sees REITs as a catalyst for a strong economic rebound
According to the Department of Finance, the growing roster of real estate investment trust (REIT) offerings is serving as a catalyst for a quick and strong economic rebound.
In a statement, Finance Secretary Carlos Dominguez said REITs have proven to be the ideal tool for raising billions of pesos required to power property development in the country while at the same time opening attractive and dependable investment opportunities for the average Filipino.
REITs are entities that own or finance income-producing real estate across a range of property sectors. Modeled after mutual funds, REITs pool the capital of numerous investors, making it possible for individual investors to earn dividends from real estate investments without having to buy, manage or finance any property themselves.
Dominguez said the growing list of REIT offerings would also propel the growth of the country’s property sector beyond the COVID-19 pandemic.
As with the previous REIT offerings, Dominguez said the latest to be listed by Filinvest Land Inc. in the Philippine Stock Exchange (PSE) amid the COVID-19 pandemic underscores the confidence of investors in the economy’s solid recovery from the impact of the global contagion.
“I wish Filinvest the best and thank its board, officers, and staff for their confidence in the strength of our economy. This REIT offering will be among the catalysts for our quick and strong economic recovery,” Dominguez said during yesterday’s listing ceremony.
He noted that FILREIT’s portfolio of Grade A office and commercial properties located in strategic areas and catering primarily to the business process outsourcing (BPO) and information technology (IT) sectors would “surely provide attractive dividend yields for investors.”
“Filinvest has also acquired a well-earned reputation for sustainable and green buildings, which should inspire other developers and set the standard for eco-friendly designs that will help achieve the country’s climate ambition of reducing greenhouse gas emissions,” he said.
Dominguez, who is the chairperson-designate of the Climate Change Commission, encouraged Filinvest to further expand its portfolio of sustainable property developments, especially outside the Metro Manila area.
The finance chief is “fairly certain” that the country has gone through the worst part of the COVID-induced crisis and is well on its way to recovery, as evidenced by the economy’s second-quarter growth of 11.8 percent, the best quarterly performance in more than 30 years.
“Despite the recent lockdown to contain the Delta variant, prospects for a strong economic rebound in 2021 remain promising. Our vaccination program, which is the most potent weapon we have against this unseen enemy, is proceeding at pace. This is a step closer to achieving herd immunity in the country,” Dominguez said.
FILREIT is the third REIT offering in the country after Ayala Land Inc. and DoubleDragon Properties Corp. listed their respective REITs in the PSE amid the pandemic.
Dominguez had strongly pushed the implementation of Republic Act (RA) 9856 or the REIT Law since he assumed the finance portfolio in 2016.
When the REIT Law was passed in 2009, no company found its terms attractive, owing to what property players listed as obstacles for the REIT to flourish in this country: friction costs, minimum public ownership requirements, and taxes.
The Duterte administration set the stage for REITs to flourish in the country after 11 years of deadlock when it successfully issued an amended set of implementing rules and regulations (IRR) for RA 9856 last year.
Under the amended IRR, the Duterte administration ensured that all shareholder proceeds from REIT offerings would be retained within the domestic economy and used to drive the country’s growth.
With its amended IRR, the REIT Law now allows both small and large investors to own real estate assets, presenting an alternative and secure investment instrument for middle-income families and overseas Filipino workers.