Belle eyes additional funds through REITs

MANILA, Philippines - High-end leisure estate developer and gaming firm Belle Corp. is interested in raising additional funds through real estate investment trusts (REITs).

Belle vice-chairman Willy Ocier said the company is planning to tap the market for REITs – an instrument that gives investors the option to invest directly in the finished product instead of the property developer itself – in two years, or when its planned casino complex has been built.

REITs are companies that own and operate income-generating real estate assets, which include offices, apartment buildings, hotels, warehouses, shopping centers and highways.

Belle, majority owned by the family of retail tycoon Henry Sy, is engaged in the development of golf courses, country clubs, residential properties and related facilities. Its flagship project is the plush Tagaytay Highlands.

It also generates equity earnings from Pacific Online Corp., the exclusive online lottery systems provider in Visayas and Mindanao, as well as from upscale property firm Highlands Prime Inc.

The Philippine Stock Exchange has approved the rules governing the listing of REITs while the Bureau of Internal Revenue has approved the draft implementing rules and regulations (IRR) of the REIT, which outlines incentives for property companies planning to sell shares of its revenue generating assets.

Under the rules, a REIT must be a stock corporation established in accordance with the Philippine Corporation Code for the purpose of owning income-generating real estate assets. It must also have a dividend policy of distributing annually at least 90 percent of its distributable income as dividends to its shareholders in accordance with the REIT law.

At least 75 percent of the deposited property of the REIT must be invested in income-generating real estate.

In 2009, the aggregate market capitalization of property firms jumped 56.5 percent as markets recovered and stock valuations increased. In terms of earnings, listed real estate developers posted an 11.8-percent growth aided by higher sales from residential condominium units.

Belle acquired Premium Leisure and Amusement Inc. (PLAI) from SM Commercial Properties Inc. PLAI is the company that obtained a franchise to operate integrated resorts, including casinos, in the 800-hectare Pagcor City.

Together with the SM Group, Belle has committed to inject $1 billion into the project over a 25-year period, of which P14 billion will be spent for the planned casino complex.

The SM Group will provide the entertainment facilities which include hotels, a sports arena, museum and an oceanarium.