Creating a new path

Property developer 8990 Holdings Inc. has become aggressive in addressing a universal challenge that is socialized housing.

That the Philippines has a massive backlog of 5.8 million units is not a new fact.

Mass housing—the lack and its hurdles—has long been a subject of countless discussions and forums, where it was concluded to have stemmed from several factors that may include lack of supply, lack of access to financing, or even government inefficiencies, among others.

Many quarters, however, would highlight the lack of access to credit and financing as the biggest hurdle to securing a home you can call your own.

But for Januario Jesus Gregorio B. Atencio III, president of leading mass housing developer 8990 Holdings Inc., there is a way to make it easier for Filipinos to buy a home.

The company is in fact launching within this quarter a novel way that will revolutionize home financing.

“We have to explore other options. We believe securitization is the way to go—that’s the wave of housing finance of the future. We will have the first private sector-led securitization effort for housing finance in the Philippines in the modern times,” Atencio said in a recent interview with the Inquirer.

“We’re doing a P3 billion initial securitization. Once we are able to do that, we would’ve opened up a new way that will change the way people buy homes in the country,” he said.

8990 has delivered more than 50,000 housing units, making it the largest builder in the affordable housing space.

Atencio explained that securitization is the process of getting all the asset-backed documents—in some cases mortages, or in the case of 8990 Holdings sales contracts—and putting them together in an asset pool, from which the company will create a securitized bond that will have a yield.

The plan was to tap China Bank Capital Corp. as underwriter for this transaction. The said bonds may likely have a tenor of 10 years, but these details, according to Atencio, are still being threshed out.

“What is the effect? With securitization, all developers can become securitized bond issuers and you are able to create an industry. You are able to create a new path on how the buyer can obtain housing finance, which today is not yet an option,” Atencio noted.

“It opens up a new way for buyers to actually get housing loans—you don’t need to go to a bank anymore. You need to go to a mortgage aggregator, or to a developer to avail one. It increases the options that are available. For the developer, it opens up another way to finance projects aside from borrowing from the bank,” he further explained.

He admitted that business is quite challenging today and hence the need to pursue innovative modes that will enable more Filipinos to buy homes.

Atencio further claimed that what he liked most about this mode of financing is that it also forces the developer to level up his or her expertise and increase the efficiencies and customer service of his or her business.

“That is why we are focusing so much on this even if today, securitization costs a lot more because it’s the first. But if we can now go through this, the second (round of) securitization will be easier and cheaper because there’s a template and it’s working,” Atencio said.

The vision is that as this mode begins to take off, developers can then go into securitization and you’ll have finance companies who will now take a second look at securitization, coming out with their own special purpose companies for this particular effort alone.

“We have pioneered a new avenue which today is not existing. That is what’s important to us, because 8990 Holdings is a trailblazer in this industry. We are willing to risk resources, reputation, and effort in order to trailblaze new things in the industry. This is what 8990 Holdings wants to be known for,” Atencio concluded.