Offshore investors may avail of REITs through central bank

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By Denise A. Valdez, Reporter

NON-PHILIPPINE residents are allowed to invest in real estate investment trusts (REITs) through the central bank, bourse operator Philippine Stock Exchange, Inc. (PSE) said.

In a memo on its website, the PSE said those residing abroad may participate in local REIT offerings by registering with the Bangko Sentral ng Pilipinas (BSP) through authorized agent banks.

Following guidelines in the BSP Manual of Regulations on Foreign Exchange Transactions, the PSE said REIT securities are considered “equity securities issued onshore by residents that are listed at an onshore exchange.”

Thus, interested investors in Philippine REITs but are living abroad may avail of full and immediate repatriation of capital and remittance of earnings using foreign exchange resources of the banking system.

At least two Philippine companies have confirmed plans to launch REIT offerings since the guidelines were revised in January: Ayala Land, Inc. (ALI) and DoubleDragon Properties Corp.

ALI has a live REIT application with the Securities and Exchange Commission for the offering of three commercial buildings in Makati City, namely: Solaris One, Ayala North Exchange and McKinley Exchange.

The application involves the primary offer of up to 47.86 million shares, a secondary offer up to 430.78 million shares, and an over-allotment option of up to 23.93 million shares, each offered at P30.05, which would raise up to P15.1 billion in net proceeds.

DoubleDragon, on the other hand, has a plan to do an P11-billion REIT offering in the fourth quarter involving 200,000 square meters (sq.m.) worth of leasing assets.

The company plans to raise a total of P66 billion from REITs by doing an annual offering starting 2020 to 2025. It currently has 803,000 sq.m. of leasing assets and plans to keep expanding in the coming years.

The government has amended rules for REIT offerings this year in hopes of attracting property developers into launching the investment vehicle. The Philippines legislated its REIT law in 2009 but it failed to take off due to stringent requirements.

The Department of Finance believes REITs can fund property development to push economic growth. “We democratize wealth by opening access for thousands of small investors wanting to be shareholders in secure and profitable real estate projects,” Finance Secretary Carlos G. Dominguez III said in January at the launch of the new REIT guidelines.