ALI takes lead with $500 M REIT sale

MANILA, Philippines — Ayala Land Inc. plans to sell real estate investment trusts amounting to about $500 million, its president and chief executive officer Bernard Vincent Dy said.

It would be the first com­pany in the country to do so since the Real Estate Invest­ment Trust Law was enacted 10 years ago.

ALI intends to list certain assets in its Makati business district.

“We’ve filed our applica­tion with the SEC (Securities and Exchange Commission) for the first REIT listing,” Dy said in a briefing following ALI’s annual stockholders meeting yesterday.

Dy said the company is tar­geting the listing of the REITs before the end of the year.

“We feel it will be another growth leg for the organiza­tion,” Dy said.

Jose Emmanuel Jalandoni, group head of commercial business, said would test the framework first, starting with its office buildings in the Makati Central Business district.

REIT is deemed an impor­tant vehicle to generate more investments especially for real estate companies. The listing of REITs, however, was stalled due to taxation issues.

Companies that own and operate income-generating real estate assets are consid­ered REIT companies. These include offices, apartment buildings, hotels, warehouses, shopping centers and high­ways.

A REIT provides investors regular income and long-term capital appreciation like mu­tual funds.

In December 2009, Con­gress passed the REIT Act, but none of the major property developers participated due to issues on ownership and taxation on asset transfers.

The government decided to tax the transfer of assets into REITs as well as slapped a 12 percent rate on additional income generated.

It also set the minimum public ownership of REITs at 40 percent for the first two years of their listing and 67 percent thereafter.

The SEC is in the process of amending the rules but Dy said they were ready to issue REITs even under the existing framework.

During yesterday’s annual stockholders meeting, ALI officials expressed optimism on the property market fol­lowing the company’s strong performance in 2018.

ALI reported a 16 percent growth in net income to P29.2 billion last year.

This year, ALI is allotting a capex of P130 billion with an initial P8 billion to be raised through the issuance of seven year bonds.

There will be another issu­ance of P15 to P20 billion from a new shelf registration of P50 billion worth of bonds.

ALI’s capex requirements will be funded by a combina­tion of loans and internally generated funds, said ALI senior vice president, treasurer and chief compliance officer Augusto Bengzon.