More realty firms to tap REIT market

MANILA, Philippines — The successful listing of the country’s first real estate investment trust (REIT) at the stock exchange will encourage more real estate players to convert some of their portfolios into REITs.

This, in turn, would help the local bourse recover from the effects of the pandemic, said Dolmar Montanez, SGV & Co Partner for Capital Markets, in a report.

He noted that in the Philippines, many companies have shelved their plans to go public considering the effect of the pandemic on local businesses and the overall economy.

“Only two companies completed their IPOs this year, with a total size of approximately $278 million. We expect to see another initial listing by the end of October, which is expected to be the biggest since 2016. What is noteworthy is the landmark listing of the first REIT in the country 10 years after the REIT law was passed by Congress,” Montanez said, referring to the listing of Ayala Land Inc.’s AREIT.

Edgar “Injap” Sia’s MerryMart also made its market debut last June.

Montanez said the first REIT IPO listing may encourage other real estate players to list in the market.

Elsewhere, global IPO activities have already rebounded sharply, hitting historic highs in the third quarter.

ASEAN markets for one saw strong growth in IPO volume.

“Globally, YTD (year-to-date) IPO activity accelerated, resulting in a 14 percent increase in the total number of IPOs to 872, and an impressive 43 percent rise in proceeds of $165.3 billion,” the report said.

IPO activity in the Americas saw 188 deals raise $62.4 billion in proceeds, increasing 18 percent and 33 percent, respectively, year to date while Asia-Pacific saw 554 IPOs raise $85.3 billion in proceeds, rising 29 percent and 88 percent, respectively.

Both markets have already exceeded YTD 2019 levels.

Paul Go, EY Global IPO leader said although the market sentiments could be fragile, the scene is set for a busy last quarter to end a turbulent 2020 that has seen some stellar IPO performance.

“The US presidential election, as well as the China-US relationship post-election, may be the key considerations in future cross-border IPO activities among the world’s leading stock exchanges. Despite the uncertainties, companies and sectors that have adapted and excelled in the ‘new normal’ should continue to attract IPO investors,” Go said.