Offshore investors may avail of REITs through central bank

June 1, 2020 | 12:06 am [ bworldonline.com ]

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

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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.

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Davao office vacancy to rise sharply this year

May 26, 2020 | 12:04 am [ bworldonline.com ]

Office vacancy rates in the Davao region are expected to increase as business activity is affected by coronavirus crisis. -- BW FILE/LSDAVALJR

By Denise A. Valdez

Reporter

OFFICE space vacancy rates in Davao are projected to surge to double-digits this year, as business activity is disrupted by lockdown measures to contain the coronavirus disease 2019 (COVID-19) pandemic.

Real estate consultancy firm Colliers International Philippines is looking at a 10% drop in office rents in Davao this year, as leasing activities in the region are seen to fall on an annual basis.

“We are likely to see a higher vacancy for 2020 because of the slower leasing activities. We’re also seeing supply completions being slowed down by the COVID-19 pandemic… Because of this supply and demand balance, we are likely to see a correction in office lease rates in Davao City,” Colliers Senior Research Manager Joey Roi H. Bondoc said in an online briefing Friday.

He said office supply may still increase this year by 20% or 53,200 square meters (sq.m.), because while completion delays are expected, the projects may still be finished in the next quarters.

But similarly, demand for office space is seen to fall more than half to 21,000 sq.m. in 2020 from 44,500 sq.m. in 2019. Colliers said this would pull down the annual average demand for office space to 13,900 sq.m. in the next two years.

With this, office space vacancy is seen to shoot up to 14.5% this year from 5.4% in 2019. The projected annual average vacancy from 2020 to 2022 is at 8%.

Mr. Bondoc said accreditation for economic zones by the Philippine Economic Zone Authority (PEZA) would be an important factor to drive office space take-up, particularly from business process outsourcing (BPO) occupiers.

“PEZA is an important factor whenever BPO companies look for expansion sites. Why? For an outsourcing company, you have to be in a PEZA-certified building to be able to grab incentives… And of course major BPO companies are very sensitive to fiscal and non-tax incentives because this would have a significant impact on their financial performance,” he said.

He noted Davao currently has 23,000 sq.m. of PEZA-certified ecozones until 2022, which can easily be taken up in less than a year.

“We need to provide more options for BPO companies that are planning to expand outside of Metro Manila,” Mr. Bondoc said. “I think it really makes sense for the government to approve more PEZA-proclaimed offices outside of Metro Manila, and of course Davao, being one of the major outsourcing sites, should get a lot of that PEZA-proclaimed office space,” he added.

Landlords are advised to highlight PEZA-accredited spaces to entice BPO companies. As health concerns have also become more important amid the pandemic, landlords should also drive attention to property management and sanitation capabilities.

For occupiers, Colliers is recommending that they lock in space in integrated communities and townships to improve access and more easily maintain physical distancing protocols.

“What’s good about Davao is it is a major BPO hub in Mindanao… Overall, we believe that Davao will remain an attractive site for investments, for businesses, for malls, for condominiums, for offices, even beyond the administration of President (Rodrigo R.) Duterte,” Mr. Bondoc said.

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Pag-IBIG expands home construction funding

May 24, 2020 | 9:48 pm [ bworldonline.com ]

PAG-IBIG Fund, the government’s low-cost mortgage agency, said it expanded its home construction fund to P10 billion from P2 billion to support the housing market and help revive the economy.

In a statement Saturday, Human Settlements and Urban Development Secretary and head of the Pag-IBIG Fund board Eduardo D. del Rosario said its House Construction Financing Line (HCFL) has been given a P10-billion budget, well above the P2 billion originally allocated for the scheme.

The additional P8 billion was approved by the Pag-IBIG board on May 20.

“This is a win-win situation for everyone involved because home construction has a high multiplier effect. Not only will this be able to construct more houses to address our members’ housing needs, this would also benefit our fellow Filipinos with the jobs that the construction would generate,” Mr. Del Rosario said.

Meanwhile, Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy P. Moti said home loan releases in the first four months of 2020 declined after the lockdown hampered construction projects and the completion of housing units financed by the agency’s home loans.

Mr. Moti said home loan releases in April fell to P882 million, down from P3.8 billion in March, P6.5 billion in February, and P5.5 billion in January.

“The drop in home loan releases during this period is only temporary and we expect to recover as we gradually transition to the new normal,” Mr. Moti said.

Mr. Moti said that Pag-IBIG has disbursed financing for 16,585 homes of which 16,170 or 97.5% are considered socialized housing and low-cost units.

In 2019, the agency’s home loan releases in the first quarter hit P17.2 billion.

In 2019, housing loan takeouts — eligible mortgages originated by other institutions and taken over by the fund — hit P86.74 billion, up 15%. — Luz Wendy T. Noble

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Real estate sector to be more ‘active’ once economy recovers

May 19, 2020 | 12:03 am [ bworldonline.com ]

The property sector is feeling the pain from the coronavirus crisis. -- CRAG

By Luz Wendy T. Noble

Reporter

THE Philippine real estate sector may become more “active” next year, as the economy is anticipated to bounce back after the pandemic subsides.

“Our view is that the recovery of the property sector in 2021 hinges on the pace of expansion of Philippine and global economies. Given a strong rebound of Philippine growth in 2021, a more active property sector is also expected,” Lyn I. Javier, BSP managing director for policy and specialized supervision, said in an e-mailed response to BusinessWorld earlier this month.

Ms. Javier cited historical data from property consultancy firm Colliers International Philippines that showed demand for segments, particularly office and residential, usually wane in the wake of an economic crisis.

Colliers International has said land values in the National Capital Region may decline by 5-15% in the fourth quarter of the year, as rental rates and selling prices plummet. Take-up rates across property segments are also seen to slump.

“Following the lower projections of real gross domestic product (GDP) growth in 2020, it is expected that impact across all segments, depending how long the crisis will be resolved, could be seen,” Ms. Javier said.

The country’s economic output shrank by 0.2% in the first quarter of 2020, the first contraction since the fourth quarter of 1998 during the Asian financial crisis.

Ms. Javier said the country’s banking industry is armed with a “strong position” to weather the crisis, including risks that may arise from the property segment.

“Banks have sufficient capital and liquidity buffers to withstand potential loan losses and liquidity constraints posed by the current ECQ (enhanced community quarantine),” she said.

The banking industry as a whole, Ms. Javier said, has maintained key metrics beyond regulatory minimum, including the capital adequacy ratio of 15.4%, a liquidity coverage ratio of big banks at 169.9%, among others.

“This is reflective of the sound underwriting practices of banks,” Ms. Javier said.

“Preliminary assessment disclosed that the expected rise in their NPLs (nonperforming loans) could be readily covered by their loan-loss provisions and capital buffers,” she added.

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Rent grace period applied to areas under modified, general ECQ

May 18, 2020 | 9:35 pm [ bworldonline.com ]

PHILSTAR/MICHAEL VARCAS

THE GRACE period for rent payments will be applied to areas where more relaxed quarantine rules are in force, the Department of Trade and Industry (DTI) said.

A 30-day deferral for residential and commercial rents was first applied during the enhanced community quarantine (ECQ) imposed on Luzon, counting from the due dates falling within the lockdown period.

Trade Secretary Ramon M. Lopez in a message to reporters Monday said the rent deferral applies to areas under modified enhanced community quarantine (MECQ) and general community quarantine (GCQ).

“The rent grace period applies during the ECQ, MECQ, and GCQ,” he said.

The DTI in a memorandum on April 4 said residential rents and commercial rents for micro, small and medium enterprises (MSMEs) falling due within the ECQ will have a grace period of 30 days. The cumulative rent due within the quarantine may be amortized over a six-month period after the lifting of the lockdown.

Lessors who do not observe the 30-day grace period face imprisonment of at least two months and/or a fine of at least P10,000.

Malls that have voluntarily waived rent during the ECQ have not announced if their waivers will be extended for stores that are not yet able to open under MECQ.

The Philippine Retailers Association (PRA) said mall operators have been taking various positions on rents.

“Some have given 50% off, some 75% off, and some (charged rent based on) percentage of sales. This is something that we will have to observe in the coming weeks and work with the different mall operators to see how both parties can cooperate and find a win-win formula to help each other in this precarious situation,” PRA Vice Chair Roberto S. Claudio said in an email Monday.

Metro Manila, Laguna, Bataan, Bulacan, Nueva Ecija, Pampanga, Zambales, and Angeles City are on MECQ until the end of the month. Under MECQ, some businesses, including non-leisure stores in malls, may have partial operations. The cities of Cebu and Mandaue are still on ECQ.

Some Metro Manila malls have restarted partial operations since the start of the MECQ, including those operated by Megaworld Corp., Robinsons Malls, Ayala Malls, and Vista Malls.

Metro Retail Stores Group Inc. announced in a statement Monday that it will be reopening some Luzon and Visayas branches, within limited schedules and with social distancing and public health measures,

Mr. Lopez also disputed reports of overcrowding at malls after Metro Manila transitioned to MECQ over the weekend.

The trade department, including Mr. Lopez, visited two malls on Sunday — SM Megamall and Robinsons Galleria.

“Aside from supermarkets and drugstores, only (about) 20% of stores opened. Crowd is estimated also about less than 30% than pre-COVID days. Malls ensure social distancing and people wearing mask,” he said, responding to photos of crowds at malls circulating online.

Health department Spokesperson Maria Rosario S. Vergeire said Sunday that mall operators and local government should follow social distancing guidelines to ensure that there is no crowding, noting that a spike in coronavirus disease 2019 (COVID-19) infections could result in a return of strict lockdowns. — Jenina P. Ibañez

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SEC now requires filings via mail as virus persists

May 18, 2020 | 12:09 am [ bworldonline.com ]

By Denise A. Valdez

Reporter

THE Securities and Exchange Commission (SEC) will be requiring regulatory filings to be sent via courier to protect its personnel from contracting the coronavirus disease 2019 (COVID-19).

The corporate regulator has issued a new memorandum circular outlining new procedures for all corporations in submitting audited financial statements and general information sheets.

Companies must now send reports through the SEC Express Nationwide Submission (SENS) to any courier of their choice. The files must be delivered to the SEC Head Office located at the Philippine International Convention Center in Pasay City. All satellite offices remain closed for receiving reports.

While under enhanced community quarantine (ECQ), the SEC will allow submission of both financial statements and general information sheets via email. But once ECQ is lifted, a hard copy of the filings must be submitted through SENS. Financial statements that will be sent must be stamped by the Bureau of Internal Revenue.

To use SENS, corporations must download and accomplish the SENS form accessible through sens.secexpress.ph. The form should be included with the reports in the envelope that will be sent to the SEC via courier.

Submission of the filings will be from June 29 to August 7 and will follow a schedule based on the last digit of a corporation’s SEC registration or license number. Those whose registration numbers end with 1 or 2 must submit within June 29–July 10; with 3 or 4 within July 12–17; with 5 or 6 within July 20–24; with 7 or 8 within July 27–30; and with 9 or 0 within August 3–7.

Corporations may choose to submit their filings before the schedule assigned to their registration numbers. Those that will not be able to submit within schedule may submit late filings starting August 10 and will be subject to penalties.

The mailing date of the filings as reflected in the registry receipt of the courier will be recognized as the date of submission of filings. If submitted through the Philippine Postal Corp. (PhilPost), the date of receipt will be the date when PhilPost receives the files.

Old rules as indicated in the Securities Regulation Code will be followed for the basic components and reporting requirements of audited financial statements.

The SEC said these guidelines will be adopted during the period of filing after ECQ, “to provide adequate protection to the frontline service personnel…from undue exposure to the risk of COVID-19.”

The government has started easing quarantine measures over the weekend in an effort to oil the economy after about two months of shutdown. Metro Manila is under modified ECQ until the end of May.

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SEC extends deadline for annual, quarterly reports

May 15, 2020 | 12:31 am [ bworldonline.com ]

THE Securities and Exchange Commission (SEC) is giving companies more time to submit their annual reports, quarterly reports and audited financial statements amid the coronavirus pandemic.

The SEC en banc has approved a 60-calendar-day extension of the deadline for the filing of annual reports and audited financial statements for publicly listed companies and issuers of registered securities with fiscal years ending Jan. 31, 2020 to April 30, 2020.

In Memorandum Circular No. 17, the SEC acknowledged the business disruptions caused by the ongoing coronavirus disease 2019 (COVID-19) pandemic.

“The Commission recognizes the degree of difficulty in the preparation of the financial statements and in the completion of statutory audits brought about by the challenges in the application of certain accounting standards and in the execution of statutory audits of the affected companies within the first and second quarters of the year,” the regulator said.

Companies, whose fiscal year-end is on Jan. 31, will now have to submit annual reports and audited financial statements by July 14 from the original May 15 deadline. Firms whose fiscal year ends on Feb. 29 will now submit the reports on Aug. 12, while those with fiscal years ending March 31 and April 30 will submit on Sept. 12 and 27, respectively.

Other companies under SEC supervision will also get a 60-day extension for the submission of annual reports. Those with fiscal year ending Jan. 31 will have a new July 29 deadline, while those with fiscal years ending Feb. 29, March 31 and April 30 will have new deadlines of Aug. 27, Sept. 27 and Oct. 12, respectively.

The SEC is also extending the deadline for the submission of quarterly reports for the first quarter of 2020 by 45 calendar days from the regular filing deadline.

For example, a company whose first quarter covers the February to April period may submit its quarterly report until July 29, 45 days from the original June 14 deadline.

These deadline extensions will automatically apply to all covered companies, including publicly listed companies and other issuers of registered securities.

However, the SEC said publicly listed companies and other issuers of registered securities that are supervised by the SEC Markets and Securities Regulation Department will have to file the special disclosure form, SEC Form 17-LC, at least five calendar days before the regular filing deadline.

The SEC said it will “continue to assess the development or impact of COVID-19 in the preparation of financial statements and in the completion of statutory audits of companies and may issue appropriate rules and regulations to address the concerns that may further arise.”

Earlier, the SEC has extended the deadline for submission of 2019 annual reports and sustainability reports of publicly listed companies until June 30. Deadline for submitting Integrated Annual Corporate Governance Reports (I-ACGR) was also extended to July 30. — D.A.Valdez

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Office sector may recover in 2021

May 12, 2020 | 12:02 am [ bworldonline.com ]

The Metro Manila office market has seen a slowdown since strict lockdown measures were implemented in mid-March. -- COURTESY OF LOBIEN REALTY GROUP

THE office market may bounce back as early as next year, if the coronavirus disease 2019 (COVID-19) outbreak is contained within the second half of 2020, according to research by the Lobien Realty Group (LRG).

“The Philippines’ real estate industry, in particular, has been seriously impacted by COVID-19 as the pandemic effectively put a stop to the operations of most businesses,” the real estate consultancy firm said in a statement.

In particular, the Metro Manila office market has considerably slowed since strict lockdown measures were implemented in mid-March.

LRG noted the expansion of Philippine Offshore Gaming Operators (POGOs) was halted due to the government’s travel ban on China and the enhanced community quarantine (ECQ) in Metro Manila.

POGOs, which have fueled the office market’s growth, has occupied 1.14 million sq.m. of office space since 2016

While the Philippine Amusement and Gaming Operations Corp. (PAGCOR) recently gave the green light for POGOs to resume partial operations, the outlook for their expansion remains dim.

“Projected POGO office demand this 2020 is 200,000 square meters (sq.m.) less as contribution from POGO is expected to slip by $0.8 billion (or around 0.2% of GDP),” LRG said.

Business process outsourcing (BPO) firms, which are feeling the pain from the pandemic, may consider expanding in the provinces rather than in Metro Manila. LRG noted the BPO industry saw office take-up of 400,000 sq.m. last year.

“BPOs, another hardest hit industry, may soon scout for alternative business locations in the emerging provincial hubs which offer more competitive rental rates and lower labor costs and have become sites of new government infrastructure projects,” LRG said.

LRH said there is currently a 15% office vacancy across all provincial business districts, with 257,000 sq.m. of new office space to become available this year.

“The average rental rate for provincial business hubs is at P606 per sq.m., which makes it more affordable than Metro Manila,” it added.

Meanwhile, traditional offices may opt to continue work-from-home arrangements with employees as a way to lower costs. Traditional offices leased 370,000 sq.m. of space in 2019.

However, LRG predicts “there could be an improved demand for office space by 2021 at a minimum of 700,000 sq.m. across Metro Manila, provided that the COVID-19 outbreak will be contained by 2nd half of 2020.”

“The demand for office space will be revived towards the latter part of the year once existing and new POGO companies as well as BPO companies continue their growth all over the country,” LRG said.

The BPO sector may also see stronger demand from global companies that need to outsource their businesses amid the pandemic, LRG added.

For the residential market, LRG said take-up will “likely soften” due to the travel restrictions and an expected rise in local unemployment.

“Prices in the secondary market are expected to decrease from its market value. Price appreciation will remain inactive depending on how the market will stabilize from the ECQ,” LRG said.

However, prices of new residential properties are expected to remain at the same level prior to the ECQ.

“There is an opportunity for the secondary market to grow as less affluent property owners dispose their assets for liquidity,” it added. — Cathy Rose A. Garcia

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Deadline for payment of local taxes extended

May 1, 2020 | 1:29 pm ; bworldonline.com ]

Rickshaws block a street from outsiders to protect a neighborhood from the spread of the coronavirus disease 2019 (COVID-19) in Manila, March 24. -- REUTERS

The Department of Finance (DoF) has extended the deadline for the payment of taxes, fees and charges to local government units (LGUs) as relief for Filipinos affected by lockdown measures around the country.

Department Circular No. 002-2020 dated April 23 extended the deadline to June 25 for payment of all local taxes, fees and charges as of March 25, with no interest, surcharges and penalties. This is in line with Republic Act No. 11469 or the Bayanihan to Heal as One Act.

In a letter to Department of Interior and Local Government Secretary Eduardo M. Año, Finance Secretary Carlos G. Dominguez III said it was the department’s view that RA 11469’s Section 4 (z) is to be “liberally construed to include all LGUs.” 

Mr. Dominguez said the DoF issued the circular to provide a “uniform adoption and implementation” by all LGUs of the extension, after only 146 local governments adopted such measures.

The DoF said the counting of the period to pay local taxes, fees, and charges will also be suspended.

“In the event that an LGU had already extended the deadlines prior to the effectivity of RA 11469, such deadlines shall be deemed modified with the period set forth herein. Any further extension thereof shall be authorized in accordance with the provisions of RA 7160 (Local Government Code),” the circular read.

The DoF also said that “no interest, surcharge or any form of penalty shall be applied on any local tax, fee or charge accruing on or due and demandable” during the extension.

However, all previous delinquencies will be due and the accrual of interest, penalties and surcharges will begin after the extension.

DoF also ordered local treasurers and assessors to postpone plans to issue written authorities on examination of books of accounts and business records; activities on appraisal and assessment of real properties; posting of notices of delinquencies, warrants of levy and advertisements of auctions; as well as “pursuing administrative or judicial action for the enforcement and/or collection of local taxes, fees, or charges.” — Beatrice M. Laforga

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