SEC approves first REIT offer

MANILA, Philippines — The Securities and Exchange Commission has approved Ayala Land Inc.’s P15.1 billion real estate investment trust, which could be the country’s first REIT initial public offering.

AREIT Inc. applied for the registration of one billion common shares for listing and trading on the main board of the Philippine Stock Exchange.   It will offer up to 47.86 million  new common shares and up to 409 million existing shares with an over-allotment option of up to 45.688 million secondary shares, at a maximum price of P30.05  per piece.

The public offering has been tentatively set from July 27 to 31 while the listing of the shares has been scheduled on Aug.7.

Net proceeds of up to P1.332 billion from the primary offer will be used for the expansion of the company’s portfolio through the acquisition of a fourth building, Teleperformance Cebu.

Ayala Land meanwhile, could net about P13.309 billion from the secondary offer, assuming full exercise of the over allotment option.

As of Feb. 1, AREIT’s property portfolio consisted of three commercial buildings namely Solaris One and Ayala North Exchange.

The SEC lowered the minimum public ownership requirement in line with the provision of the REIT Act that a REIT must have at least 1,000 public shareholders each owning at least 50 shares of any class of shares and, in aggregate, at least one-third of the outstanding capital stock.

REITs were previously required to maintain a 40 percent public ownership in the first year of their listing.

The law allows REIT companies to list and trade its shares of stock in stock market as an alternative means to raise funds for property development and expansion initiatives.

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

With the REITs, investors have access to dividend-based income, inflation protection, and portfolio diversification.

Meanwhile, DoubleDragon Properties Corp. chaired by tycoon Edgar “Injap” Sia is also preparing for its REIT listing.

In a disclosure yesterday, Double Dragon said the  first tranche of its REIT assets would comprise of leasable properties of DD Meridian Park consisting of seven buildings with a total area of 248,349 square meters.

The DD Meridian Park REIT or DDMP has an estimated value of P50.9 billion and the company expects to generate P17 billion of proceeds from the planned REIT listing.

This represents an offer of 33.33 percent of the selected REIT assets, which is the minimum public float based on the revised REIT listing rules.

DoubleDragon chief investment officer Hannah Yulo-Luccini said the REIT valuation of $1 billion is an attractive size that would appeal to a strong pool of both foreign and local REIT investors.

Proceeds from the listing will be reinvested in the Philippines including the construction of about 450,000 square meters of building floor area which will further significantly increase the leasable portfolio and recurring rental revenues of the company in the near term.

Double Dragon will infuse two more buildings in the DDMP REIT after two to three years after the initial seven buildings that will comprise the first tranche.

The company is targeting to list in October.