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Parañaque, Makati offices ‘most attractive’ for REIT listing

OFFICE assets in the bay area in Parañaque City, as well as in Makati City are the most attractive to list on the Real Estate Investment Trust (REIT) framework, according to a global property services firm.

At the sidelines of a roundtable discussion in Makati recently, Colliers International-Philippines research manager Joey Roi Bondoc said lower office vacancy rates would be crucial for public investments in REITs.

He said Parañaque and Makati would be among the most attractive, given their vacancy rates of only 0.5 percent and 1 percent, respectively.

Facade of the Insular Life Building in Makati City, one of two cities that are most attractive for REIT listing. PHOTO BY COLLIERS INT’L.COM

“I think it would be very attractive if you divest office buildings that are in sub locations, which have a very low vacancy rates — for example: bay area, 0.5 percent vacancy rate. Makati CBD [central business district], 1 percent vacancy rate. Those are very interesting locations. Once you divest these properties into REIT, then the public will be made aware that… there’s a good mix of tenants,” Bondoc said.

Bondoc said average yields from REITs in the region alone were at 4.8 percent, and could go beyond it if office assets within said locations are to be listed.

In the bay area, office leasing is dominated by the Philippine Offshore Gaming Operators industry, while that in Makati is taken up by mixed locators, including the business process outsourcing segment.

Outside office, Bondoc said retail properties were also an attractive asset to diversify into REITs.

Given the strong interest from property developers to issue REITs under the revised rules, Bondoc urged the government to fast-track the launch of its final implementing rules and regulations (IRR).

Rules on REITs have been enacted in 2009, but provisions such as the 67-percent minimum public ownership, as well as taxation issues prompted developers to shun the framework.

In the bay area, office leasing is dominated by the Philippine offshore gaming operators industry. PHOTO BY COLLIERS INT’L.COM

The Securities and Exchange Commission, the Department of Finance and the Philippine Stock Exchange(PSE) have started reviewing anew the revised rules to ensure that all proceeds from the issuance will be reinvested locally. The regulators were hoping to come up with the final IRR before yearend.

The PSE earlier said the launching of the new REIT rules would boost liquidity and raise additional $3 billion.

Among the property giants who have moved forward with their REIT offerings are Ayala Land Inc. and DoubleDragon Properties Corp.

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