RL Commercial REIT offer period starts today

(Corrected September 5)

RL Commercial REIT [RCR 6.45] is the Gokongwei Family’s first REIT, and it will go on sale starting today at P6.45/share. Purchasing REIT IPO shares is the same as buying regular IPO shares. Investors can buy from their broker, or they can use their PSE EASy account to purchase up to 155,000 RCR shares (the PSE EAsy program limits purchases for us “Local Small-time Investors” to under P100,000 per IPO). That being said, it’s not a guarantee that an investor will receive the number of shares that they’ve signed up for.

Regardless of whether the investor uses their broker or PSE EASy account, if demand for RCR shares exceeds the supply of IPO RCR shares, then it’s possible that some or all of the IPO order may go unfilled. Exactly who gets what when an IPO is “oversubscribed” in this way is not as important as just knowing that it’s possible to sign-up for shares and still not receive the allocation requested before the IPO.

MB BOTTOM-LINE

I mention all of this only to provide new investors with some background into what can happen when buying an IPO. Please do not take this talk of oversubscription, scarcity, and partially-filled orders to be some kind of tip that I think this stock is going to fly off the shelves. It’s not. I’m not hyping RCR, just providing some background to new investors about how IPOs (and specifically REIT IPOs) work. Judging by the emails that I receive on an almost daily basis,  buying IPOs is still intimidating and a little confusing to people despite the major improvements to accessibility through the introduction (and subsequent improvement) of the PSE EAsy program. My goal is to make this process more familiar to the new investor, to take away some of that barrier to entry to a world that was once the playground only to a fraction of Philippine society.

That said, IPOs should not be considered automatic money-maker. Most falter. AREIT [AREIT 36.80 1.08%] was allegedly 2x oversubscribed, but fell significantly after its IPO and remained below IPO offer price for weeks. DDMP [DDMPR 1.84 1.08%] held its IPO back in March, limped to a 1% gain 3 weeks after issue, and has spent the rest of its life significantly below its IPO price. It was oversubscribed as well. I didn’t hear any oversubscription hype about Filinvest REIT [FILRT 7.14 0.14%], and its IPO has held above its offer price the whole time so far. Investing in IPOs can be rewarding, but like everything with investing, you have to do your due diligence to make sure the opportunity (and the risk it entails) is right for you. Good luck to everyone going into RCR.

If you’re interested in testing your intuition without putting any real money at risk, why not write yourself an email with the number of shares and total investment you would have subscribed to, and review this email at the IPO. For extra spice, maybe review that email every quarter. I did this with my own investing when I first started, and it helped demonstrate in very clear terms that my returns were negatively impacted whenever I FOMO’d without doing the proper research.

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

(Editor's note: This article has been edited to reflect that RL Commercial REIT was priced at P6.45/share and not P0.80 as reported in an earlier version.)