More players seen entering REIT market
MORE companies are expected to join the real estate investment trust (REIT) market after an Ayala Land Inc. (ALI) subsidiary became the first firm to try to do so, according to a property consultancy firm.
“We expect ALI’s move to entice national and provincial players to follow suit,” Colliers International Philippines said in a report late last week.
The report comes after Ayala Land unit Areit Inc. filed a REIT application with the Securities and Exchange Commission (SEC) that seeks to raise as much as P15.10 billion from the issuance.
If approved, Areit plans to offer up to 502.57 million common shares at P30.05 apiece.
Net proceeds will be used for future investments in real estate in Metro Manila and other key regions.
Colliers said it “sees ALI’s move as a catalyst in enticing Philippine developers to utilize REITs as an alternative source of fresh capital.”
Given the land congestion in Metro Manila and increasing land values, Colliers said proceeds from REIT issuances could be allocated to develop properties in Cebu, Davao, Iloilo, Bacolod and Pampanga.
The consultancy company urged firms in the countryside to tap the REIT market if they could, recommending that “developers use REITs to access a cheaper source of capital and renovate and reposition assets, such as offices, malls and warehouses.”
Megaworld Corp., Robinsons Land Corp. and DoubleDragon Properties Corp. are among those interested to tap the market.
The Philippine Stock Exchange, Department of Finance, Bureau of Internal Revenue and SEC inked last month the final guidelines for REITs after spending more than a decade discussing them.
REITs are alternative investment options besides preferred shares and bonds that allow small and medium investors to participate in the property market.
The participating stock company should have a public float of at least 33 percent and paid-up capital of P300 million. The REIT firm should pay out annual dividends of at least 90 percent of the distributable earnings.
Proceeds from the transaction should be reinvested in the domestic market, be it in real estate or infrastructure, within a year.