SEC oks first REIT listing

ALI top brass
L-R top to bottom: ALI vice-chair Jaime Augusto Zobel de Ayala, chair Fernando Zobel de Ayala, president Bernard Vincent Dy, chief financial officer Augusto Bengzon at the ALI 2020 stockholders meeting via Zoom

The Securities and Exchange Commission has approved the country’s very first real estate investment trust (REIT) listing, sponsored by property giant Ayala Land Inc., that aims to sell as much as P15.1 billion worth of shares to the public this July.

In its July 9 meeting, the SEC en banc approved the registration statement of AREIT Inc. for 1.093 billion common shares for listing and trading on the main board of the Philippine Stock Exchange under the trading symbol “AREIT.”
 
The SEC will issue the corresponding order of registration and the permit to offer securities for sale upon determination that the company, formerly known as One Dela Rosa Property Development, Inc., has complied with the remaining requirements.
 
The registration statement covers up to 47.86 million new common shares and up to 409.019 million existing common shares for public offering, with an overallotment option of up to 45.689 million secondary shares, at a maximum offer price of P30.05 per share.
 
AREIT may run the public offering from July 27 to 31 and debut on the Philippine Stock Exchange on August 7, based on the latest timetable submitted to the SEC. This is subject to the PSE’s approval.

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

The two other property assets infused into AREIT are:

– Solaris One, a 24-storey Grade A PEZA-accredited commercial building in Dela Rosa Street, Legaspi Village which has 46,767.96 square meters of GLA; and,

– McKinley Exchange, a five-storey Grade A, PEZA-accredited mixed-use development in McKinley Road corner EDSA Makati which has 10,687.50 square meters of GLA, of which 9,633.32 square meters are designated for commercial office leasing.

Assuming full exercise of the overallotment option, the public offering will allow the public to own 49 percent of the issued and outstanding common shares of AREIT.
 
Ayala Land will retain a 41.61 percent shareholding in AREIT, while its subsidiary AyalaLand Offices, Inc. will own the remaining 9.39 percent upon completion of the public offering.

BPI Capital Corp. will serve as the sole global coordinator for the maiden share sale. It will concurrently act as joint bookrunner, together with UBS AG Singapore branch, and joint lead underwriter, along with PNB Capital and Investment Corp. and SB Capital Investment Corp.

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 requires 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 its 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.