Written by Miguel R. Camus / Reporter
Sunday, 17 January 2010 19:20
ROCKWELL Land Corp., the high-end property developer of the Lopez Group, is joining other real estate firms in exploring the Real Estate Investment Trust (REIT) Act as an alternative source of funding.
The REIT Act, which will provide a regulatory and tax incentive framework for developers to raise cash by publicly listing their income generating assets, lapsed into law on December 17.
In an interview last week, First Philippine Holdings Corp. (FPHC) president Elpidio Ibañez said Rockwell Land is studying the transfer of some of its assets into REITs to raise funds instead of tapping the debt and equity markets.
“We are studying the REIT Law,” said Ibañez. “We can raise funding by putting the mall [or income producing] properties to get investors…and use that funding for new developments.”
FPHC now owns 49 percent of Rockwell Land after recently acquiring the 24.5-percent stake owned by Benpres Holdings Corp., another listed Lopez firm, for P1.5 billion. The balance is held by power distributor Manila Electric Co.
Ibañez said some of the assets that can be listed for REITs are Rockwell Land’s Power Plant mall and office buildings within the 15.5 hectare Rockwell Center in Makati City.
Some of the big-name developers that have expressed interest in the REIT Law are the SM Group, Ayala Land Inc. and Robinsons Land Corp.
Shares of REITs are to be listed on and traded at the Philippine Stock Exchange. Individual investors may invest in these firms, allowing companies to raise funds from the REITs. To encourage REITs, the law provides certain tax incentives.
To continue enjoying these incentives, the REIT must maintain its status as a listed company and annually give out at least 90 percent of its distributable income to shareholders.
Meanwhile, Ibañez said Rockwell Land also remains open to proceeding with its initial public offering, though this will depend on the debt market, which remains “cheap and available.”
He added that any fundraising moves will be used for future projects. This, as the firm’s current projects—namely The Grove on C-5 Road in Pasig City and Edades Tower in Makati City—can be funded from operations.
The company likewise remains bullish this year on the back of strong sales from The Grove. The 5.5-hectare project, estimated to cost between P10 billion and P12 billion, will have a total of six residential towers offering 2,000 units alongside a retail component.
In an earlier interview, Rockwell Land president Nestor Padilla said the first two towers are already 50-percent sold and will be fully taken up by the first half of this year.
Turnover of units for first two towers is expected by 2012. Units range from studio rooms costing about P3 million to larger three-bedroom units for up to P12 million.
Rockwell Land was started in 1995 to redevelop a former power plant site into a new living environment which is now the Rockwell Center. The area has since been turned into a mixed-use community, consisting of five high-rise residential towers, a sports and leisure club, office buildings, a lifestyle shopping center and a graduate school of law, business and government.
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