Pioneering Ayala-backed REIT ‍gobbles P13.6B in IPO

The first Philippine real estate investment trust (REIT), Ayala Land-backed AREIT Inc., has completed an initial public offering (IPO) estimated at P13.6 billion, attracting strong inte­rest from investors long thirs­ting for a new asset class that pitches high dividend yields.

The pioneering IPO was oversubscribed by twice the base offer size of P12.33 billion, with “high-quality” domestic and international institutional investors participating in the book-building notwithstanding the COVID-19 pandemic, Ayala Land disclosed to the Philippine Stock Exchange (PSE) on Thursday.

The stock market snapped up 456.883 million firm offer shares, consisting of 47.86 million shares to be issued by AREIT on a primary basis and 409.02 million secondary shares offered by Ayala Land at P27 per share. There is an overallotment option of up to 45.69 million shares, which could bring the final deal size to P13.6 billion.

About 70 percent of the firm offer shares were distributed to qualified institutional buyers here and abroad. About 30 percent of the shares were offered to all REIT-eligible trading participants of the PSE and to local small investors (LSIs).

The total offer made available to trading participants and LSIs stood at 91.38 million and 45.69 million shares, or about 20 percent and 10 percent of the firm offer, respectively.

“AREIT, being a BPO (business process outsourcing)-centric REIT, is a major beneficiary of the trends in the office leasing sector. Not only is the office leasing segment a defensive segment in the property sector, but there is growing optimism that the BPO industry will see a resurgence as a result of the recession in the West, brought about by the COVID-19 pandemic,” leading online stock brokerage COL Financial said in a research note.

REIT is a corporation that primarily invests in income-generating real estate.

Based on its prospectus, AREIT is projecting a dividend yield of 4.85 percent this year and 5.85 percent for next year.

With the completion of the offer, AREIT is targeting to list on Aug. 13.