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Robinsons Land balks at REIT minimum float

Posted on August 14, 2011 10:13:53 PM [BusinessWorld Online ]

ROBINSONS LAND Corp. may be the next developer to shelve plans for setting up a real estate investment trust (REIT), with a ranking official hinting last week that recently passed rules for the investment vehicles were deterring big industry players.

Robinsons Land’s REIT sentiments reflect the general mood of the real estate industry at present, Robinsons Land President and Chief Operating Officer Frederick D. Go said at the sidelines of the two-day 20th National Retail Conference and Stores Asia exposition.

Top developers SM Investments Corp. and Ayala Land, Inc. had already deferred their own REIT plans this month, citing difficulties in meeting the mandated 40% public minimum float, the world’s highest, to be raised to 67% in three years.

He described the rules as not conducive to investment, adding he is not surprised major players are “not keen” to invest in REITs. Robinsons Land previously disclosed that it intended to raise $500 million via REIT.

“When the rules are created that way, you do not attract the big players to create REITs,” Mr. Go said, explaining that major industry players with clear expansion goals are the firms that should be investing and benefiting from REITs.

In a press statement last week, the Asia Pacific Real Estate Association (APREA) has similarly hit the Finance department’s insistence to implement REIT rules despite industry assessments deeming them be “unworkable,” adding that potential economic benefits to the country are largely at risk.

“There seems to be a failure to understand the economic benefit, what it takes to create a successful REIT market and how global institutions allocate funds to listed real estate,” said APREA Chief Executive Officer Peter Mitchell. “The benefits that REITs bring to the broader economy are well documented and it is therefore very disappointing that the regulators in the Philippines are continuing to delay their introduction,” he said.

In the meantime, the Gokongwei-led developer has so far posted a strong performance with net income for the nine months ending June this year increasing by 18% to P3.048 billion, data from a financial report filed with the local bourse on Friday showed.

Combined real estate and hotel revenues were up by 17% to P9.269 billion from P7.947 billion recorded in the same period last year.

The commercial centers division, which account for nearly half of total revenues, posted an 8% growth to P4.6 billion from P4.274 billion last year from new Robinsons malls in Dumaguete, Ilocos Norte, General Santos City, Tacloban, and Davao City.

Residential revenues, which account for 32% of total revenues, jumped by 33% to P3.111 million from P2.331 million due to “an increase in completion level of existing projects.”

Higher rentals from office complexes Cybergate Center 3 and Cybergate Plaza brought in P976.3 million in revenues for the office buildings division, up 15% from P865.6 million last year.

As such, costs similarly rose 17% to P5.768 billion.

Robinsons Land shares were up by 0.50% to P12.28 on Friday versus P12.22 from its previous close. -- FJGDLF
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