CLI to pursue Reit listing soon

·3 min read

PROPERTY developer Cebu Landmasters Inc. (CLI) remains firm in its plan to enter the real estate investment trust (Reit) in the medium-term after it will significantly gain from its recurring income projects and establish a solid track record.

During its recent analyst briefing, Grant Cheng, CLI’s chief finance officer, said the company wants to grow at least five to 10 percent in revenues from its recurring income projects.

“We expect our recurring income portfolio, which was held up a bit for two years because of the pandemic to contribute significantly (to the company’s earnings) in three to four years’ time and to really ramp up by then. If you look at the pipeline of our hospitality projects, we will be opening some in 2023 to 2024, if you factor in a little ramp-up time until the opening, we want to target at least five to 10 percent from these recurring projects,” Cheng explained.

CLI’s leasing business, according to Franco Soberano, CLI’s executive vice president and chief operating officer, has been “picking up and is an emerging part of the business.” Rentals increased by 35 percent year-on-year following the completion of and signing of new leases in Latitude Corporate Center in Cebu Business Park.

“Reit is definitely in our plans in the medium term, perhaps in a four to five-year horizon coinciding with the maturity of our recurring income assets... We want to make sure that we are offering a quality product that has been tested, and proven and I believe this is a necessary requirement with several years of track record,” said Cheng.

Reits are companies that own or finance income-producing real estate across a range of property sectors.

Cheng added that while the hotel owns several hotel assets, the company commits to enhancing and improving its portfolio so that when it sells to the market it will have a quality offering that will stand out and offers something unique and pure diversification to investors.

Several of CLI’s hotel projects, for instance, will be opening starting 2023. By 2026, the listed company will have a total of 10 hotel projects with a total of 1,775 rooms.

Reit capitalization

As of December 2021, the Philippines has five Reits listed on the stock exchange. These are AREIT Inc., DDMP REIT Inc., Filinvest REIT Corp., RL Commercial REIT Inc. and MREIT, Inc.

Reits in the Philippines have raised P76.42 billion thus far in new capital.

In a report to Finance Secretary Carlos Dominguez III, the Securities and Exchange Commission (SEC) said the total size or market capitalization of these Reits amounted to US$3.46 billion or 0.96 percent of the Philippines’ gross domestic product of $362.24 billion as of the third quarter of 2021, based on the global survey conducted by the European Public Real Estate Association (Epra).

This places the country’s less than two-year-old Reit sector in the middle of the pack among 12 selected economies in the South and East Asian regions in the Epra Index, ahead of Taiwan, South Korea, India, Indonesia and China, SEC said in its report.

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