APREA Press Release Criticizing GPH for Failure in REITs


APREA criticizes Philippines government failure to implement REITs Potential benefit to national economy at risk August 9 2011, Singapore – The Asia Pacific Real Estate Association (APREA), which promotes and represents the real estate sector on a regional basis, has reacted strongly to the news that SM Prime Holdings has dropped its plans to launch a REIT because of insistence by government regulators on proposed rules that APREA and the industry in general have repeatedly stated to be unworkable. The Philippines introduced a REIT Act as far back as December 2009. However, supporting regulations are required for the law to become operative.

Draft regulations were prepared in May 2010 but the new administration chose to re-open certain issues, of particular note increasing the minimum level of public ownership from the level prescribed in the Act of 33% to a sliding scale of 40% rising to 67% in 3 years. 33% is already high by international standards and the sliding scale proposed has been widely critcised as being unworkable and risks killing off the REIT idea in the Philippines.
Peter Mitchell, CEO of APREA said, “It is now getting on for 2 years since the REIT Act was enacted. There has been a lot of global institutional interest in investing in new REITs in the Philippines and the advent of REITs has been eagerly watched.

“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. 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.

“The record over the last year looks very sorry compared to the way in which REIT laws have been welcomed in the other countries in the region.

“The minimum public ownership condition, even if accepted by a sponsor, would
result in very sub-optimal products being offered, to the detriment of investors. Either way, if insisted upon it will ensure that REITs won’t successfully get under way in the Philippines.

“To be sure, there are aspects of the new law that won’t be perfect, but the
experience of other countries shows that it is best to get it under way and consider enhancements on the basis of performance.

“The window won’t stay open for ever, and the obfuscating may kill a major potential benefit to the economy through, amongst other things, billions of extra dollars flowing in.”

About APREA:

APREA is a non-profit industry association that works to encourage greater investment in the real estate sector in Asia Pacific through the provision of better information to investors, improving the general operating environment, encouraging best practices and unifying and strengthening the industry. APREA’s mission is to:

• Promote the real estate sector in the Asia Pacific region to domestic and
foreign investors
• Develop a unified and powerful professional industry body, and
• Represent the sector to governments and regulators to improve the commercial operating environment for members Its membership comprises real estate companies, listed real estate trusts, unlisted property funds, investment managers, investment banks, property securities fund managers, institutional investors, real estate consultants, corporate advisors, stockbrokers, investment advisors and universities.

APREA membership is the gateway to a network of the industry’s most influential decision makers and provides the opportunity to influence and participate in the development of the real estate markets in Asia.

APREA’s achievements in education and information dissemination, and focus on improving the general real estate operating environment, have firmly entrenched it as the leading representative body for the industry in the region. In particular, its achievements in driving regulatory improvements within the listed real estate trust sector extend beyond existing markets and pave the way for the emergence of new markets in other Asian countries.

For additional information on APREA, please visit www.aprea.asia.

APREA focuses its attention on activities that benefit the real estate sector in the region. Among the recent achievements by APREA in Asia Pacific are:

• Production of the first edition of its Best Practices Handbook and the establishment of annual best practice regional awards
• Various submissions concerning proposed accounting and financial reporting standards that impact real estate entities
• Establishment of new member chapters in the Philippines, India and Australia
• Increased research and information available to members
• New committees – Sustainability, Valuation and Investor Outreach committees
• Launch of APREA Institute programs in Malaysia and the Philippines
• Advocacy to regulators in Japan, India, Hong Kong and Singapore
• Ongoing assistance to the Philippine Stock Exchange leading to the passing of a REIT Law
• Annual survey of Asian real estate leaders , the results of which were disseminated and discussed at the 2011 APREA Property Leaders Forum in Beijing
• Annual compensation trend survey of Asian real estate companies
• Successful annual Property Leaders Forum in Beijing in April 2011
• Successful annual VIP – Asia Investor Roundtable in Singapore in September 2010
• The holding of many industry events including seminars on debt and market outlook
• Launch of a research report on sustainability best practice amongst Asian companies
• Launch of a research report on corporate governance in Asian listed real estate vehicles, including corporate governance indices in Malaysia, Japan and Singapore
• Launch of a research report on the significance of real estate in Asian pension funds

About APREA Institute:

The APREA Institute, APREA’s education and training arm, provides the foundation for
raising standards in the industry through the provision of practical and applied training programs to real estate professionals. Its Certificate of Real Estate Investment Finance program is the only course of its kind in the region to be both developed and delivered by industry practitioners. It is currently delivered in China, Hong Kong, the Philippines, Malaysia and Singapore and the feasibility of delivery it in India is currently under consideration.

For more information, please contact:

Is Abdul Mohaimin
Events Manager, APREA
+65 64381110

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