No fireworks for Robinsons Land's mammoth REIT IPO

MANILA, Philippines (Update 1, September 17, 2021, 5:04 p.m.) — Investors gave a lukewarm welcome to the Gokongwei family's real estate investment trusts (REIT) company, which made a decent stock market debut following the biggest maiden share sale of a REIT firm in the country to date.

From its offer price of P6.45 per share, RL Commercial REIT Inc. — the fourth of its kind in the country backed by property giant Robinsons Land Corp. — hit an intraday high of 1.6% on Tuesday before paring those gains to close at P6.46 each, up 0.16%.

It was a modest debut for RL Commercial, which raised close to P23.5 billion in fresh capital during the largest initial public offering of a REIT firm in the country. A total of 3.3 billion shares were up for grabs during the offer period, with an option to sell 305.1 million more stocks in case of robust investor demand.

But for Aniceto Pangan, an equity trader, RL Commercial’s promised returns to investors might not have been attractive enough to trigger intense buying pressure. “RCR ended flat near its IPO price today may be attributed to the recorded high inflation rate of 4.9% for the month of August, thus putting the dividend yield of RCR at 5.7% less attractive,” Pangan said in a text message.

Over a decade since the REIT law was enacted, REITs have proven to be a successful investment vehicle in the country — both for landlords and investors looking for steady dividend income. As a publicly-listed companies, REITs are mandated to use cash raised from the IPO to develop and expand its portfolio, enabling landlords to recycle capital. In turn, 90% of income from these real estate assets are required to be distributed to investors as dividends.

Based on its IPO price and projected financial performance, RL Commercial is expecting to reward investors with a dividend yield of 5.7% this year, and a bigger 5.96% in 2022. To compare, RL Commercial’s implied 2021 yield is lower than those of its rivals DDMP REIT Inc. and Filinvest REIT Corp., but it was better than that of AREIT Inc.

Still, Luis Limlingan, head of sales at Regina Capital, believes RL Commercial made an impressive market debut. The local bourse flirted with the 7000-level before closing down by 0.69% to 6,920.36.

“Market as a whole was sold down so, given the circumstances, it outperformed the market in general,” Limlingan said in a separate text message.

RL Commercial REIT’s property portfolio includes 14 commercial real estate assets with total gross leasable area (GLA) of 425,315 square meters, most of which are offices that may be converted to retail spaces “as required.”

“This public offering is another vote of confidence that the Philippine economy is on track to a solid recovery from the difficulties brought about by the pandemic,” Finance Secretary Carlos Dominguez III said in his pre-recorded message at RL Commercial’s listing in the Philippine Stock Exchange (PSE).

Editor's note: This article has been edited to reflect that RL Commercial REIT's offer price was P6.45/share and not P16.45 as reported in an earlier version.