9 firms eye REIT offering

MANILA, Philippines — A total of nine companies are looking to do a real estate investment trust (REIT) offering in a bid to maximize the value of their real estate assets, according to Leechiu Property Consultants.

During the Villar Group Convention, Leechiu Property Consultants president and CEO David Leechiu said some of the companies looking to do their REIT offerings have yet to announce their plans, but some of these firms already have sponsors that are publicly listed.

“Some are looking to do it in the next couple of months,” Leechiu said.

At present, there are already two REITs in the country: Ayala Land’s AREIT and Double Dragon’s DDMP REIT.

Among the nine companies are Filinvest Land Inc. (FLI), the Villar Group, Megaworld, Robinsons Land, Sy-owned SM Prime Holdings and Megawide sister company Citicorp.

In a recent report, JP Morgan said some $3.5 billion worth of investment assets could be unlocked with $1.4 billion of fresh capital to be raised by Megaworld, FLI and RLC via their REIT IPOs slated in the third quarter.

“We believe REIT sponsors could maximize the benefits by demonstrating ability to recycle capital into return-enhancing spending, and generate a robust pipeline of assets for future acquisitions by the REITs,” JP Morgan said.

Megaworld, RLC and FLI are expected to benefit from net asset value accretion potential should the market accept the indicative yields, it added.

Among the three, Megaworld has the highest potential given its low yield range at nine to 11 percent, JP Morgan also said.

“This assumes the market accepts the low indicative yield range of 4.1 percent to 4.5 percent, which is 100 basis points lower than AREIT’s IPO valuation. MREIT’s higher asset growth potential, in our view, is a factor behind the low yield considering Megaworld’s large office portfolio size and decent PEZA coverage.

“Furthermore, MREIT’s plan includes an MOU to acquire four new office towers from Megaworld by end-2022, which could add 71,000 square meters of office space, or grow MREIT’s initial gross leasable by 32 percent,” JP Morgan said.

Megaworld is eyeing to raise P27.3 billion from a REIT offering this year. It plans to offer secondary shares of up to 1.2 billion common shares at an offer price of up to P22 per share.  Proceeds from the sale will be reinvested to further expand the company’s office portfolio.