Ayala Land prepares $300M REIT offer

MANILA, Philippines — Property giant Ayala Land Inc. (ALI) is preparing to raise as much as $300 million from its maiden offering of real estate investment trust (REIT) shares, potentially the first public offering of this new asset class in the country.

The plan is to infuse $500 million worth of assets with steady recurring revenues into the REIT and sell down two-thirds of this entity to the public, ALI chief financial officer Augusto Bengzon said in a press briefing Tuesday.

“We are hopeful that we can do it at the latter part of this year or next year,” ALI president Bernard Vincent Dy said.  “We are ready to go.”

He added that ALI was now in talks with the Securities and Exchange Commission for the REIT offering. However, ALI has yet to file any formal application.

REIT gives investors the option to invest directly in the finished products that are already earning money – such as residential and office units, hotels or shopping malls or even infrastructure ventures like toll roads and power plants – and not just the property developer itself. This is meant to attract investors because the Philippine REIT law of 2009 requires the distribution of 90 percent of income annually.

ALI plans to infuse two Makati commercial assets into the proposed REIT.  One is the newly-built two-tower office complex Ayala North Exchange, which has a gross leasable area of around 56,000 square meters.  These office towers are specially designed for both multinational and business process outsourcing companies.

The group plans to use Makati assets in its maiden REIT offering, given that this new asset class targets retail investors.