MANILA – The Social Security System (SSS) said it is optimistic to generate more profit from its PHP6-billion investments in nearly all real estate investment trusts (REITs) available in the country this year.
In a statement on Monday, SSS President and Chief Executive Officer Rolando Ledesma Macasaet said the optimism was due to the expected rate cut in the second half of the year and the increasingly favorable market conditions.
Macasaet said the positive outlook sets the stage for potentially higher returns on SSS' investments.
Of the PHP6 billion investments in REITs, more than 75 percent were purchased this year.
SSS Investments Sector Concurrent Acting Head Ernesto D. Francisco Jr., meanwhile, said SSS currently invests 5 percent of its equity funds in REITs.
The pension fund is eyeing to further increase the investment.
"REIT is a fantastic investment structure for pension funds like SSS because 90 percent of the lease income is mandatorily distributed. The REIT sector also greatly contributes to economic development since REIT players must reinvest within one year," Francisco said.
Francisco said REITs will be among the top contributors to this year's investment income because they continue to offer attractive dividend yields higher than the prevailing benchmark rates.
"The more robust and diversified the cash flow of the REITs asset, the more we will invest in them," Francisco said.
"Looking ahead, we envision a promising future for the Philippine REIT sector, which could potentially become a major contributor to the capital market. Consider Singapore, where 20 percent, or six out of 30, of its Straits Times Index component is composed of REITs. The absence of REITs in the Philippine Stock Exchange Composite Index presents a significant growth opportunity. Singapore's vibrant individual investor base, a key growth driver of their REITs, serves as an inspiring model for us," Francisco added. (PNA)
