Posted on 10:17 PM, October 07, 2010 [ BusinessWorld Online ]
THE PHILIPPINE Stock Exchange (PSE) no longer expects real estate investment trusts (REIT) to list this year due to delays in the release of tax rules.
The bourse is however willing to hold talks with the government -- which wants changes in the new REIT law’s implementing rules such as higher public ownership of REITs -- to hasten the introduction of the new investment vehicle, said Val Antonio B. Suarez, president and chief executive of the PSE.
In the meantime, the PSE will work on doubling active local investors to 800,000 until the end of next year, the official said.
“I do not think we will have a REIT [listing] within the year. If before the end of the year the [rules on taxation] come out, maybe [there will be listings] early next year,” Mr. Suarez said.
The law, which took effect last December, establishes the framework for the creation of REITs -- corporations that use a pool of investor funds to purchase and manage real estate assets.
The Finance department, which has raised concerns over foregone revenues from incentives granted by Republic Act No. 9856 or the REIT law, wants the Securities and Exchange Commission to raise the amount of REIT shares to be offered to the public to at least 50% from 33.3%.
“Based on my discussions with some of the bigger players, a lot of them have built this business, this franchise. So it may be very difficult for them to consider letting go of what they have built for so many years,” Mr. Suarez said.
Mr. Suarez added that the desire to keep businesses running depends on the level of ownership.
Property giants have expressed interest in REITs. Last week, Ayala Land, Inc. set up AyalaLand Commercial REIT, Inc. SM Prime Holdings, Inc. and Robinsons Land Corp. have also said they would tap the REIT law to raise funds.
“As an alternative ... what we can [propose] is the minimum capitalization should be P1 billion, but [the public float will still be 33%],” he said.
The proposal to increase the minimum paid-up capital from the current P300 million will increase public participation, Mr. Suarez said, adding he had relayed the proposal to the Finance department verbally.
“We are open to working with economic managers to find out how to protect the interest of the country at the same time being able to launch these REITs,” Mr. Suarez said.
Meanwhile, the PSE wants to increase the number of active local investors through education campaigns.
“Conservatively, we should at least try to double the active investors by the end of next year,” Mr. Suarez said, adding that there are currently 400,000 active traders.
Mr. Suarez said the PSE will conduct more road shows in the provinces and hold more courses on securities.
“I think for this year, we have agreed to use more the technology to reach out to new investors,” Mr. Suarez said.
“A potent tool to achieve that goal is through online trading. You see a younger set of investors going into the market,” Roberto Juanchito T. Dispo, executive vice-president of First Metro Investment Corp., told reporters.
The PSE, the only local exchange in the country, has 250 companies and 132 active trading participants, of which only 10 have online facilities.
Meanwhile, the PSE has elected a new director.
In a meeting last Oct. 6, the board of directors elected Robert G. Vergara as non-broker director vice Estrella C. Elamparo, who had resigned.
Mr. Vergara is the newly appointed president and general manager of the Government Service Insurance System (GSIS). GSIS, a government financial institution, has been a principal shareholder and strategic investor of PSE since 2004.
Mr. Vergara was formerly managing director and founding partner of Cannizaro (Hong Kong), Ltd., which manages assets of about $800 million. He was also a principal at Morgan Stanley Asia Ltd. and helped set up and manage Morgan Stanley’s Asian proprietary trading activities. -- Neil Jerome C. Morales
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