RCR debuts on stock market as largest, most valuable REIT

Real estate investment trust RL Commercial REIT Inc. (RCR) debuted on the local stock exchange on Tuesday as the largest REIT to come to market so far, allowing sponsor Robinsons Land Corp. to recycle P23.5 billion in fresh capital to catalyze more property projects.

“We are committed to its long-term sustainable growth. It is our goal to become the bellwether of the Philippine office market, and we will pursue this with the highest standards of governance to create sustained shared success with all our stakeholders. Today is just the beginning,” Frederick Go, RCR chair and Robinsons Land president, said during the virtual listing ceremony. The offering of RCR, the fourth REIT to list on the Philippine Stock Exchange, was “oversubscribed,” but proponents did not provide any specific figure.

RCR’s share price inched up by 0.16 percent to close at P6.46 on its inaugural trading day at the stock market on Tuesday, bucking the sluggish overall market. This gave RCR a market capitalization of P64.17 billion, larger than AREIT Inc.’s P39.43 billion, as well as DDMP REIT’s and Filinvest REIT’s P31.9 billion and P35.4 billion, respectively.

RCR has thus set a new record as the largest REIT, not just in terms of offering size but also in terms of market capitalization, asset size and portfolio valuation.

Apart from growing organically by maintaining its business process outsourcing-dominated office buildings property and maintaining high occupancy of high-quality tenants, Go noted that RCR would grow by acquiring third-party assets from the market, using borrowings against equity.

“The most important strategy in the inorganic growth would be the sponsors’ support to RCR, whereby RLC being the sponsor will infuse assets into RCR over time. And, of course, this will all be subjected to the due process and proper governance, to ensure that the long term success of RCR and the reward to shareholders will always be accounted for,” he said in a press briefing after the listing ceremony.

Initial portfolio

RCR’s initial portfolio consists of 14 commercial real estate assets located in central business districts across Metro Manila such as in Makati, Bonifacio Global City and Ortigas, Quezon City and Mandaluyong and in the key cities of Naga, Tarlac, Cebu and Davao.

RCR’S current portfolio has a total gross leasable area (GLA) of 425,315 square meters (sq m), of which committed occupancy rate is 99 percent. Based on property consulting firm Santos Knight Frank’s appraisal, the value of the assets amounted to P73.9 billion as of end-June this year.

Robinsons Land is ready to infuse one to two assets per year into the REIT. As a starting point, RLC and RCR have agreed on the latter’s acquisition of Cyberscape Gamma and/or Robinsons Cybergate Center 1. These two assets have a combined GLA of 72,100 sq m.

Ramon Monzon, president of PSE, said during the listing ceremony that it was no surprise that institutional investors, both foreign and local, heavily supported RCR’s IPO.

“Local small investors or LSIs from 52 provinces and 14 countries likewise joined the RCR investment bandwagon,” Monzon said.

“In fact, for the first time ever in PSE’s history, a local small investor from Iraq invested in an IPO via PSE’s electronic location system or PSE Easy. This clearly indicates the trust and confidence of investors in the property development track record, professional management and vision of RCR’s sponsor Robinsons Land Corp.,” Monzon noted.

Securities and Exchange Commission chair Emilio Aquino said REITs were proving to be very attractive to local retail investors, in line with regulators’ goal of presenting this new asset class as a vehicle for the “democratization” of wealth in the country.

“Moreover, this scenario shows the potential of REITs as viable alternative to pulling away investable money from scams and all sorts of risky investment products being peddled in the internet and social media. This is what the SEC wants to see – investable funds being allocated into more productive and income-producing ventures such as the real estate and infrastructure projects of the REIT sponsors, rather than being wasted in scams,” Aquino said.

Finance Secretary Carlos Dominguez III noted that aside from RCR’s impressive portfolio, and its staying record as a property developer, the longest lease of 99 years extended by Robinsons Land to RCR “provides long term sustainability and predictability to one’s investment in this public offering.” INQ