Property developer Ayala Land Inc. said it filed an application for a P14.4-billion Real Estate Investment Trust offering, less than a month after the government eased the rules on the new investment vehicle.
Documents filed with the Securities and Exchange Commission showed Ayala Land unit AREIT Inc. was planning to offer 478.64 million, mostly secondary, shares at a maximum price of P30.05 apiece. It was also asking for an option to sell another 23.93 million shares in case of over-allotment.
AREIT owns three commercial buildings in Makati City including the 24-story Solaris One, the mixed-use development Ayala North Exchange and the five-story McKinley Exchange.
The company said using the proceeds from the primary offering worth P1.35 billion, it planned to acquire a fourth mixed-use building in Cebu.
“Ayala Land’s initiative to pioneer REITs in the Philippines reflects its confidence in the local economy. Through this initial capital market transaction, ALI hopes to pave the way for the development of a REIT market in the country, bringing another milestone to the Philippine stock market. The company seeded AREIT Inc. with Grade A office assets located in Makati CBD and is expected to expand its portfolio with new acquisitions in the future,” Ayala Land said in a statement.
AREIT said it would conduct the REIT offering after receiving approvals from government regulators.
The REIT Act, passed by Congress in 2009, allows REIT companies to list and trade its shares in the Philippine Stock Exchange as an alternative means to raise funds for property development and expansion initiatives. The law, however, failed to take off because of taxation issues and the high minimum public ownership requirement.
The Bureau of Internal Revenue in January this year issued the amended rules exempting REITs from value added tax on the transfer of real estate assets.
The SEC also reduced the minimum public ownership requirement for REIT companies to 33 percent from the previous requirement of 40 percent public ownership in the first year of listing. This would increase to 67 percent within three years.
It said that in exchange for lower public ownership requirement, an REIT company should reinvest all the proceeds raised from the REIT offering in real estate or infrastructure projects within the country within a period of one year.
The REIT is a new asset class that provides investors with dividend-based income, inflation protection and portfolio diversification. It broadens investment options for Filipinos, opening the opportunity to own a stake in high-value real estate assets in the country.