REITs raise P75 billion in fresh capital

MANILA, Philippines — Real estate investment trusts (REITs) in the Philippines have raised nearly P75 billion in fresh capital since the government released new rules and regulations to fix the flaws in the regulatory framework for the financial instrument, according to the Department of Finance (DOF).

Citing a report by the Securities and Exchange Commission (SEC) to Finance Secretary Carlos Dominguez, the DOF said the size of the REIT market in the country reached $3.46 billion, or nearly one percent of the economy, as of the third quarter of 2021.

This places the Philippines’ REIT industry in the middle of the pack among 12 economies in Asia – ahead of Taiwan, South Korea, India, Indonesia and China in the European Public Real Estate Association (EPRA) index.

Dominguez said the success of the initial public offerings (IPOs) of REITs goes to show that investors trust the country’s macroeconomic fundamentals. He also said investments made in the property market boost the economy’s chances at bouncing back from the pandemic.

Based on SEC data, Robinsons Land Commercial REIT (RCR) raised the largest capital at P21.56 billion as of Nov. 15.

The Megaworld REIT (MREIT) and DD Meridian Park REIT (DDMP REIT) came in next, taking in P15.29 billion and P14.71 billion in fresh capital, respectively, followed by Filinvest REIT Corp. (FILREIT) with P12.58 billion and Ayala Land’s AREIT Inc. with P12.28 billion.

Citicore Energy REIT Corp., for its part, hopes to raise P10.1 billion from its IPO scheduled in the first quarter, the SEC said.

Under the new rules and regulations issued by the government, capital raised by REIT sponsors and promoters should be reinvested in the Philippines. The amount then will be used to develop the corporate market, expand small-scale investor participation and finance public infrastructure.

AREIT, DDMP REIT, FILREIT and RCR have reinvested a total of P22 billion from their capital, while MREIT has yet to redirect any amount as required by the law. The five REITs are tasked to reinvest P79.87 billion from their IPOs and stock trading.

AREIT, the pioneer in the country, has reinvested P13.76 billion out of the required reinvestment of P19.31 billion, while DDMP REIT has channeled P6.1 billion of the mandated P12.87 billion into the domestic economy.

On the other hand, FILREIT and RCR have listed reinvestments of P1.57 billion (out of P12.13 billion) and P583.15 million (out of P20.86 billion), respectively.

Dominguez expects REITs to raise more money for the development of the country’s property sector.