Stock Commentary

IP E-Game Ventures plans to create a REIT

Merkado Barkada
IP E-Game Ventures plans to create a REIT

IP E-Game Ventures [EG suspended] [link] disclosed that its board approved the company’s plan to invest in a new subsidiary that would be converted into a REIT (real estate investment trust) and eventually listed on the PSE. EG has been suspended for seven years (since 2017) for failure to comply with its basic reporting obligations, but in that time, has been engaged in a transition from the company’s old business model (free-to-play online games) to a new one involving opportunities in the gaming, leisure, and entertainment sectors. EG did not mention what assets would be included in the alleged REIT.

MB BOTTOM-LINE: This one is a little weird to me, since “operating a REIT” isn’t really a business strategy. I mean, for the independent companies that do operate REITs as required by the REIT Law it is, but for the EG board to suddenly be interested in operating a “REIT business” it sounds like they’re coming at it a little backward. We don’t know what the company has really been doing for the past seven years, so maybe they’ve been diligent little savers and have been buying up income-generating properties and are now ready to spin those off into a REIT. That would be amazing. Unfortunately, the last time EG was able to report on its financial condition it disclosed only ?20 million in “property and equipment” assets. They also listed ?2.5 billion in “deposit for future investments”, so maybe they converted that into something REITable that satisfies the basic REIT Law requirements of being worth more than ?300 million and having at least 3 years of operational history. I’m cheering for EG. It’s not clear if this is just wishful thinking, but I’d like to see REITs evolve into something that is more accessible to smaller companies as a tool for raising (and recycling) capital.

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