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Shang Properties to join REIT bandwagon

Posted on 09:46 PM, June 23, 2010 [ BusinessWorld Online ]

LISTED Shang Properties, Inc., the local real estate development arm of Malaysia’s Kuok Group, has pre-sold a fifth of its high-end condominium project in Mandaluyong so far, an executive said yesterday.
The property developer is looking at putting up a real estate investment trust (REIT) to raise funds from the public, another official said.
Shang Properties Marketing Manager Milen G. Treichler told reporters that since March, the company has sold 413 units worth P3 billion for One Shangri-La Place.
“If you look at the sales of One Shangri-La Place, 216 units were sold without any advertisements,” Mr. Treichler said after the company’s annual stockholders’ meeting in Ortigas Center.
“Population is growing, spending power is growing, the overseas Filipinos are coming back to invest here in the country,” he added.
The high-end One Shangri-La Place, which will stand on top of a six-floor mall that can accommodate 140 retail outlets, will have about 1,200 one-bedroom, two-bedroom and three-bedroom units valued at P4.9 million to P18 million each.
Excavation started last year, which should allow the project’s completion in 2014.
The second tower will be launched by the end of the year.
Furthermore, the property developer is looking to develop its land bank in Malugay in Makati, Fort Bonifacio, Tagaytay, Naic and Tagaytay in Cavite, and Mabini in Batangas, Mr. Treichler said.
Outgoing Shang Properties President and Chief Executive Juan Andres D. Bautista said the company was looking forward to tapping REITs.
“Part of the REIT will not only be Shangri-La mall but an office building ... we need more property with stronger recurring income,” Mr. Bautista said.
Richmond C. Bata, investment analyst at 2Trade Asia, agreed, saying the portfolio of Shang Properties is not yet on a sizeable scale for a REIT.
In December, Republic Act No. 9856, which will allow companies to use pooled capital of investors to buy and manage income-generating property and mortgage loans under REITs, lapsed into law.
Property giants have already expressed interest to acquire funds through the investment vehicle. SM Prime Holdings, Inc., the country’s largest mall operator, last week said it was looking to raise as much as $600 million through a REIT. Last month, Ayala Land, Inc. also said it would raise $300 million from REITs.
Shares in Shang Properties -- whose profits slightly dropped to P182.7 million from P195 million in the first quarter on lower rental revenues from The Enterprise Center -- were last traded on Tuesday at P1.80 each. -- Neil Jerome C. Morales
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