The reforms initiated by the Duterte administration to fix the flawed regulatory framework under the over decade-old Real Estate Investment Trust (REIT) Act has cleared the way for this “powerful financial mechanism” to broaden access to investments and become an indispensable tool in rebuilding the economy, Finance Secretary Carlos Dominguez 3rd said Wednesday.
When the Duterte administration resolved last year the issues that prevented REITs from taking off since its law was enacted in 2009, two major property developers were able to successfully list their REIT offerings in the stock market, Dominguez said.
Dominguez congratulated DoubleDragon Properties Corp. (DDPC), and its chairman, Edgar Injap Sia 2nd, “for bringing another milestone to the Philippine stock market” with its successful public listing of its REIT today.
“I commend DoubleDragon’s remarkable business acumen and resilience amid these challenging times. As with the previous initial public offerings (IPOs) made during the pandemic, DoubleDragon’s REIT listing reflects the strong confidence of our investors in our economic recovery,” Dominguez said.
DoubleDragon has successfully thrived in adverse conditions and even amid the uncertainties triggered by the coronavirus disease 2019 (Covid-19) pandemic, he said.
Dominguez recalled that while the economy remained largely on lockdown last year, DoubleDragon successfully launched the IPO of its MerryMart Consumer Corp., a retail company principally engaged in the operation of grocery stores.
DoubleDragon has again done so with its REIT, which is the largest issuance so far and the second to be listed in the country’s history following Ayala Land Inc.’s (ALI) pioneering REIT last year.
Ayala Land’s REIT raised P13.6 billion while DoubleDragon’s offering is expected to net as much as P14.7 billion.
Dominguez said the economy has been delivered a “powerful financial mechanism” to further broaden access to investments and promote greater financial inclusion for the Filipino people.
“At this particular time in our history, REITs are indispensable to rebuilding a strong and truly inclusive economy for our people. These will make available huge volumes of capital to our financial system that will help fund our long-term growth,” he added.
Dominguez said when the REIT law was passed in 2009, no company found its terms attractive, owing to what property players cited as friction costs, minimum public ownership requirements, and taxes as obstacles for the REIT to flourish in this country.
It was the Duterte administration that “took on the challenge of crafting a regulatory framework for this financial instrument that is right for the country,” Dominguez said.
He said the administration also ensured that all shareholder proceeds from REIT offerings will be retained within the domestic economy and used to drive the country’s growth.
In keeping with this provision in the law’s implementing rules and regulations (IRR), Dominguez said a majority of DoubleDragon’s REIT proceeds will be infused as equity into its CentralHub Industrial Centers Inc. (CICI) to carry out the company’s plan to build a chain of modern industrial warehouse complexes in strategic locations across the country.
Dominguez said this “ambitious” infrastructure investment will help bridge the gap in the country’s logistics distribution network, encourage the expansion of manufacturing activities, create more jobs, and help fuel economic recovery.
“I look forward to more REITs that will help drive our infrastructure modernization and open more business opportunities in the country,” he added.