Finance dep’t offers REIT rule compromise THE FINANCE department has softened its stance on the public ownership level to be required of firms seeking perks under the Real Estate Investment Trusts (REIT) Act, a development that could finally lead to law’s implementation. Finance Secretary Cesar V. Purisima, who had wanted REITs to sell 51% of their shares to the public to make sure capital is "recycled" rather than used to repay debts, is now willing to bring down the initial public float requirement to below 50%. The REIT law’s implementing rules require only a public float of 33%. "We are open to a program where we start with less than 50% but move towards greater public ownership," Mr. Purisima yesterday told reporters on the sidelines of a Financial Executives Institute of the Philippines meeting in Makati. "Based on my discussions with [the Securities and Exchange Commission] they are open to that concept but we just have to fine-tune exactly what it is," he added. Mr. Purisima said the public float level would still "be higher than 33.3%" but did not go into details. He added that a working group composed of representatives from the Finance department, SEC and the Bureau of Internal Revenue would present the proposal to the public-private Capital Market Development Council (CMDC) in a meeting next quarter. "It will not be 33.3%. We are still finalizing the program to be presented to the [CMDC] in our next meeting. We plan to finish the REIT issue during that meeting," Mr. Purisima said. SEC Commissioner Ma. Juanita Cueto, in a phone interview, said the CMDC, as a policy-recommending group, "will greatly help" in the drafting of the rules since it is composed of "private players that may be affected." Republic Act 9856 or the REIT Law, which took effect in December 2009, establishes the framework for REITs -- corporations that use a pool of investor funds to purchase and manage real estate assets. REITs can raise money by going public and are entitled to tax incentives. The law, however, has yet to be implemented in the absence of tax rules from the BIR, which is under the Finance department. A REIT, as defined in the rules, is a stock corporation "owning income-generating real estate assets". It must be listed on the stock exchange and have at least 1,000 shareholders, each with at least 50 shares of any class and who, in the aggregate, must own a third of the REIT’s outstanding shares. A REIT should have a minimum capitalization of P300 million. It must dispense 90% of its distributable income -- defined as net income adjusted for unrealized gains or losses -- as dividends each year. Under the law, the sale or transfer of real properties to a REIT shall be levied only half the applicable documentary stamp tax (DST) as well as registration and annotation fees. Initial and secondary public offerings of securities will be exempted from the initial public offering tax while the sale or exchange of securities will be exempted from the DST. While he is willing to lower the initial public float, Mr. Purisima said this should eventually go up to 67% on a REIT firm’s third year. "That did not change. I still want 67% in the third year," he said. "In the first place, we in the government also want to develop the market and in doing so, we have to compromise [with other agencies]," he explained. Ms. Cueto declined to comment, saying she was not privy to the talks between SEC Chairman Fe B. Barin and Mr. Purisima. Ms. Barin and Philippine Stock Exchange officials were not immediately available for comment. -- PPM
Manufacturing projects accounted for roughly two-fifths of the commitments recorded by the Board of Investments, Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA) and Clark Development Corp. Filipino investors were behind two-thirds of the figure or P346.5 billion. This was a 79.9% increase from 2009. Foreign investors, meanwhile, pledged P196.1-billion worth of projects, up by 61%. Nearly a third (29.8%) of the foreign direct investment (FDI) pledges came from Japan. The Netherlands, Korea, Switzerland, the United States and Cayman Islands trailed behind as other top sources of proposed FDI. The committed projects from both Filipino and foreign investors are expected to generate 134,534 jobs once they come on stream. This, however, is 27% less than the employment figure forecast from investment pledges filed in 2009. Most of the new jobs will be seen in PEZA sites as investments registered with this state agency are projected to create nearly two-thirds of the forecast employment. -- J. A. D. Hermosa |
U.S. Stocks Advance as Federal Reserve Grows More Optimistic on Growth U.S. stocks gained, pushing the Standard & Poor’s 500 Index to a 32-month high, as a higher forecast for economic growth from theFederal Reserve, improving earnings and takeovers bolstered confidence in equities. Dell Inc. surged 12 percent, the most since December 2008, as earnings beat analysts’ estimates on business spending. Deere & Co. gained 2.4 percent to a record after boosting its full- year profit forecast. Genzyme Corp. rose 1.1 percent as Sanofi- Aventis SA agreed to buy the company for $20.1 billion and Family Dollar Stores Inc. soared 21 percent as Nelson Peltz offered to acquire the retailer for as much as $7.6 billion. The S&P 500 rose 0.6 percent to 1,336.32 at 4 p.m. in New York, the fourth gain in five days. The Dow Jones Industrial Average rallied 61.53 points, or 0.5 percent, to 12,288.17. The Nasdaq Composite Index added 0.8 percent to 2,825.56, while the Russell 2000 Index climbed 1 percent to 828.37. Both gauges rose to the highest level since October 2007. “The more optimistic view of the Federal Reserve is confirmed in part by the financial performance of major U.S. corporations,” said Richard Skaggs, senior equity strategist at Loomis Sayles & Co. in Boston, which manages $152 billion. “Frankly we’re encouraged to see the Fed take note of the improvement that is seen in some quarters.” The S&P 500 has gained 6.3 percent this year, adding to 2010’s 13 percent rally, amid government stimulus measures and higher-than-estimated corporate profits. The gauge needs to rise 1.3 percent to 1,353.06 in order to complete a 100 percent rally from its 12-year low in March 2009. Earnings topped estimates at 72 percent of the 371 companies in the S&P 500 that reported since Jan. 10, according to data compiled by Bloomberg. Fed Meeting Stocks extended gains today after minutes from the Fed’s last policy meeting showed officials “continued to express disappointment in both the pace and the unevenness of the improvements in labor markets,” while also judging the recovery to be on a “firmer footing.” Policy makers raised projections for economic growth this year and made little change to forecasts after 2011 or for unemployment and inflation. Stock-index futures rose before the open of exchanges as Commerce Department figures showed that housing starts climbed 15 percent to a 596,000 annual rate. The median forecast in a Bloomberg News survey called for a 539,000 rate. Work started on 78 percent more dwellings with two or more units, overshadowing a drop in single-family houses that indicates the housing market continues to struggle. An index of homebuilders in S&P indexes rose 1.7 percent as all of its 12 members rallied. KB Home advanced 2.1 percent to $14.64.Lennar Corp. climbed 1.9 percent to $20.85. |
Oil Climbs as Israel Says Iranian Warships Heading for Syria Crude rose after Israeli Foreign Minister Avigdor Lieberman said two Iranian gunboats are planning to move through the Suez Canal toSyria, spurring concern that Middle Eastern oil shipments will be disrupted. Oil climbed 0.8 percent after Lieberman called the move he expects later today a “provocation.” The possible action by Iran comes five days after Egyptian President Hosni Mubarak stepped down. Brent crude, the European benchmark that is more sensitive to Middle East unrest, settled at the highest level since Sept. 25, 2008. “This is the latest addition to the Middle East risk premium,” said Phil Flynn, vice president of research at PFGBest in Chicago. “This is a knee-jerk reaction to the headlines that Iran is planning to send two warships through the Suez Canal.” Crude oil for March delivery rose 67 cents to settle at $84.99 a barrel on the New York Mercantile Exchange. Prices are up 10 percent from a year ago. Brent crude oil for April settlement advanced $2.14, or 2.1 percent, to $103.78 a barrel on the London-based ICE Futures Europeexchange. The premium of April Brent to New York oil for the same delivery month rose to a record $15.94 a barrel today. The gap averaged 76 cents last year. “The tension in the Middle East is having a greater impact on the Brent market,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “This has a much bigger impact on Europe, we don’t get as much oil from the Middle East.” |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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