GSIS eyes PPP model to maximize value of property holdings

The Government Service Insurance System (GSIS)—the country’s largest pension fund—said on Friday it would pursue a public-private partnership (PPP) model to derive more income from the large inventory of real estate held in its books.

In a statement, the agency that manages the pension fund of over 2 million active and retired state workers said it wanted to maximize the use of its property assets for the benefit of its members.

“Through PPP, GSIS can redevelop its properties for productive or commercial use, which will boost our income and sustain our fund life,” its chair and acting general manager, Rolando Macasaet, said.

According to its 2018 annual report, the GSIS holds P99.1 billion worth of investment property, up 49 percent from the P66.4 billion recorded in the previous year.

These include properties that were previously the subject of mortgage loans, commercial-industrial loans, or lease purchase agreements to corporations, which were foreclosed or acquired through dacion en pago arrangements in favor of the GSIS due to nonpayment of loans.

“In its continuing efforts to enhance revenue income from its investment properties, the governing board of the GSIS attended a PPP seminar conducted by Philippine Reclamation Authority chair and certified PPP specialist lawyer Alberto Agra,” the agency said.

During the said seminar, the GSIS board of trustees were briefed on various PPP modalities that include build-operate-transfer schemes, joint ventures, divestment, lease, management contract, service contract, real property swap and concession.

In 2012, the GSIS entered into a PPP contract with the Philippine Investment Alliance for Infrastructure, considered as the first private equity fund for infrastructure projects in the country.

The decision to use the PPP mode to maximize the value of its properties comes a few months after the fund—under its previous head—entered into a public spat with tycoon Enrique Razon Jr. over a GSIS-titled property in Manila on which the businessman’s International Container Terminal Services Inc. (ICTSI) operates from.

The former GSIS leadership wanted ICTSI to either buy the 67-hectare property from them for at least P37 billion or pay monthly rent, but the port operator said it already paid rent for the port area land to the Philippine Ports Authority as mandated by the Marcos-era presidential decree.