First REIT to go Public Next Month
On July 10, the Philippine Securities and Exchange Commission (SEC) approved the initial public offering (IPO) of the Ayalaland Group's first Real Estate Investment Trust (REIT) in the Philippines and its initial listing on the Philippine Securities Exchange (PSE).
Ayala Land initially planned to issue a REIT during 2019 and has already reorganized its subsidiary, DeLa Rosa Property Development, into Ayala Land REIT (AREIT). Although, the issuance plan schedule is behind schedule due to confusion and the spread of new corona infection.
With the approval of the SEC, REIT will finally appear in the Philippines for the first time.
On February 7, 2020, Ayala Land applied to the SEC for REIT sale (IPO). Specifically, it will sell about 478.64 million shares of AREIT (of which about 47.86 million are new shares) for 30.05 pesos per share. A maximum of approximately 23.93 million shares of additional options will be attached, and if this additional option is fully exercised, the total issue amount will be approximately P15 billion. However, the issuance of new shares is 4, since there are only 7.86 million shares, most of which are existing shares. Ayala Land will acquire about 1.44 billion pesos of new capital.
The real estates subject to REIT this time are the 24-story Solaris One, Ayala North Exchange, and McKinley Exchange commercial buildings in Makati City, with plans to expand the portfolio in the future. The IPO period for this AREIT is currently scheduled for July 27-31, 2020, and the PSE listing date is August 7.
In the Philippines, the Real Estate Investment Trust (REIT) Law came into effect on February 9, 2010. However, after that, disagreements over the tax system and disclosure ratio continued. Even 10 years after the establishment of the REIT law, the REIT has not yet been established.
In order to overcome this situation and launch REITs, the Securities and Exchange Commission (SEC) published the final REIT guidelines in October 2019. The final guideline includes relaxing the minimum emission rate of REIT-creating real estate companies in the first year to 33%. PSE also lowered the minimum paid-in capital regulation for REIT issuing companies.
On January 20, 2020, the SEC, BIR, Ministry of Finance, and PSE signed the REIT final guideline approval signature. The unestablished situation for 10 years after the enactment of the REIT law is being put to an end. [Philippines Economy/Finance/Investment Information] The final guideline approval was signed. The unestablished situation for 10 years after the enactment of the REIT law is coming to an end. [Philippines Economy/Finance/Investment Information]
Finally, REIT will be listed in the Philippines. I've only talked about it 10 years ago, but it will finally come true. REIT is a product that invests in real estate with funds collected from investors and distributes it to investors using rent income and real estate sales obtained from it as a source of investment. It is called "trust". In the future, the real estate market in the Philippines will decline due to the impact of the new coronavirus, but we expect that the listing of REIT will raise from the bottom.