The Philippine Stock Exchange approved the P15.1-billion initial public offering of AREIT Inc., the country’s first real estate investment trust owned by property developer Ayala Land Inc.
AREIT will offer 502.57 million shares, including an over-allotment option of 45,688,700 shares, for P30.05 apiece. It will set the final price on July 22 and the offering period from July 27 to Aug. 3, 2020.
“We are set to witness a milestone in the capital market with the first REIT IPO. We are excited over the prospects of the REIT sector now that we have a first mover in REIT listing,” said PSE president and chief executive Ramon Monzon.
“We are pleased that AREIT has decided to pursue its IPO even under the present economic challenges brought about by the COVID-19 pandemic. We are optimistic that the company’s IPO will pave the way for other property firms, even those that are not yet listed in the PSE, to consider listing REITs,” Monzon said.
Under the revised implementing rules and regulations of Republic Act No. 9856, or the REIT Act of 2009, AREIT will reinvest the net proceeds in real estate and/or infrastructure projects in the Philippines within a year.
REITs are also required to declare dividends of at least 90 percent of distributable income.
AREIT’s property portfolio consists of three commercial buildings, excluding the land on which they stand, including Solaris One and Ayala North Exchange and, as of Feb. 1, 2020, McKinley Exchange via lease from the sponsor.
“Aside from the potential advantages this investment instrument provides to investors, REITs provide a positive multiplier effect on the economy due to enhanced economic activity. Furthermore, REITs may help boost the government’s ‘Build, Build, Build’ program given the wide range of real estate property assets it can own, including hospitals, cell towers, airports, seaports, and infrastructure development,” Monzon said.
“The reinvestment clause in the REIT rules of the Securities and Exchange Commission also facilitates that proceeds from identified activities are invested back in real estate or infrastructure projects in the country,” he said.
AREIT’s offering will have a local small investor tranche. About 10 percent of the offered shares will be allocated to LSIs.
Subscription to LSI shares may be done online through the PSE EASy website or mobile application.