ALI bent on REIT listing in 2020

Despite extreme market volatility triggered by the new coronavirus disease (COVID-19) pandemic, property giant Ayala Land Inc. (ALI) intends to still push through this year with the market debut of what could be the country’s first real estate investment trust (REIT).

ALI earlier spun off three revenue-generating assets in its Makati central business district bailiwick into a new entity called AREIT Inc., and will then sell down as much as 49 percent of the shares to raise P15.1 billion under the newly minted REIT framework.

“We are keen on pushing through with our REIT listing,” ALI chief financial officer Augusto Bengzon told the Inquirer.

ALI was scheduled to submit last week its revised REIT plan to the Securities and Exchange Commission. The group is likewise awaiting further comments from the Philippine Stock Exchange, Bengzon said.

“Markets willing, we hope we can list the first REIT in the country either in the third or fourth quarter of 2020,” he said.

Although the local stock market had turned bearish even before the COVID-19 virus shook the global community, one recent favorable development is that Presi­dent Duterte has turned more friendly to the Ayala group.

REIT is a corporation that primarily invests in income-generating real estate such as office spaces, shopping malls, service apartments, and even hotels, hospitals and warehouses. It gives investors an opportunity to invest directly in the finished projects rather than the developer itself. This was meant to attract dividend-seeking investors because the REIT law required the distribution of at least 90 percent of income as dividends annually.

The REIT Act, passed by Congress in 2009, allows REIT companies to list and trade shares of stock, allowing developers to recycle capital for further property development and expansion initiatives. In the last 11 years, the REIT asset class did not take off due to tax and other regulatory restrictions which the government recently addressed, coming up with an amended REIT framework that is acceptable to the financial market.

In the case of AREIT, its portfolio consists of five buildings in three projects with a sum of about 153,000 square meters of gross leasable area (GLA).

The biggest of the assets infused into AREIT is Ayala North Exchange, which has two office towers that stand on top of a three-story retail podium, as well as collection of 293 serviced apartment units branded as Seda Residences Makati. The first tower is a 12-story headquarter-type office while the second tower is a 20-story Philippine Economic Zone Authority (Peza)-accredited business process outsourcing office. This asset has a total GLA of 95,554.35 sqm.

The two other property assets infused into AREIT are:

– Solaris One, a 24-story Grade A Peza-accredited commercial building 0n Dela Rosa Street, Legaspi Village, which has 46,767.96 sqm of GLA; and,

– McKinley Exchange, a five-story Grade A, Peza-accredited mixed-use development at McKinley Road corner Edsa Makati which has 10,687.50 sqm of GLA, of which 9,633.32 sqm are designated for commercial office leasing.

Based on the prospectus, AREIT intends to expand its portfolio by acquiring from an affiliate a fourth property—Teleperformance Cebu in Cebu IT Park, which has 17,947.96 sqm of GLA—using proceeds from the primary shares portion of the IPO. INQ