VistaREIT IPO offer starts today
The VistaREIT [VREIT 1.75 pre-IPO] [link] IPO offer period starts today, after the Villar Family announced a surprisingly deep price cut to make the REIT’s yield more attractive to investors.
The Villars have not provided an updated Prospectus or REIT Plan, which will be important to confirm some of the critical components of this offering.
The most recent version available online is from May 16, and does not use the new share price or offer size in its projected yield calculations.
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The REIT Plan says that VREIT will make P721.61 million in net income for the last 8 months of 2022, and that it will distribute 100% of that amount as dividends for the period.
The REIT Plan says that this would have resulted in a P0.1/share in dividends 5.77% yield for 2022, based on that original P2.50 price, but VREIT hasn’t released an updated REIT Plan to show its projected 2022 and 2023 yields based on the new price.
We also don’t have confirmation (yet) on whether there have been any additional changes to the REIT Plan that might have altered any of the assumptions that were made.
If we assume that the only two things that have changed are the price (P2.50 down to P1.75) and the size of the offer (3.66 billion shares down to 2.75 billion), then my math puts the projected yields at 8.25% for 2022 and 8.99% for 2023. Not only would that be the highest initial estimated yield of any REIT (the previous record was held by Citicore Energy REIT [CREIT 2.55 unch] at 7.00%), it would be the highest annualized yield of any REIT on the PSE based on VREIT’s new P1.75 price.
That initial 8.25% yield is almost 20% higher than anything else currently available on the market, between CREIT’s 6.9% annualized yield (based on its Q1 dividend, not its REIT Plan projections).
Will VREIT distribute 100% of its distributable income for 2022 and 2023?
Will any future lockdowns related to COVID negatively impact the earning potential of the two malls that form part of the REIT’s portfolio, dragging down potential yield?
Will a series of rate increases prevent VREIT’s initial share price from climbing as high as it might have to normalize its yield and risk relative to its peers?
REIT investments are long-term in nature, and if you’re considering investing, these are some questions that might be worth looking at. Everything is context.
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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.
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