The slew of initial public offerings of real estate investment trust companies (REITs) is expected to help fuel the recovery of the domestic economy.
“For investors, REITs implement the constitutional policy of democratization of wealth. REITs also help build a more vibrant capital market and spur infrastructure development,” Financial Executives Institute of the Philippines (FINEX) president Francisco Lim said.
He said REIT companies planning to list are raising capital to fund their expansion plans, which can spark more economic activity.
Aside from generating more jobs and wealth amid the current health crisis, REITs will deepen the Philippine capital markets and provide investors with more options.
Since the listing of the Philippines’ first REIT offering in the local stock market in late 2020, REITs have attracted around 90,000 investors, said Lim.
REITs are companies that own and operate income-generating real estate assets, such as offices, apartment buildings, hotels, shopping centers, warehouses, hospitals, retirement homes, student housing, airports, seaports, highways, transmission towers.
Their income stream can come from lease rentals or other forms of recurring income of the property portfolio of the REIT.
By buying shares in a REIT, investors can tap into different areas of the market and potentially earn dividends without buying or managing the property on their own.
So far two companies, AREIT Inc. of Ayala Land Inc. and DDMP REIT of DoubleDragon Properties Corp. have conducted REIT offeings.
Two more companies have filed applications with the Securities and Exchange Commission, namely Filinvest REIT Corp. (FILRT) of Filinvest Land Inc. and RL Commercial REIT of Robinsons Land Corp.
FILRT plans to raise as much as P14.9 billion in proceeds from its planned maiden share offering. FILRT owns and operate a portfolio consisting of 16 office buildings on the 18.7-hectare Northgate Cyberzone, one of the first Philippine Economic Zone Authority (PEZA) accredited IT Parks in Filinvest City in Alabang, Muntinlupa; and one office tower with a retail component in Cebu Cyberzone, also a PEZA-registered economic zone in the gateway to Cebu IT Park, Lahug, Cebu City. These properties have a total gross leasable area of 301,362 square meters.
RLC REIT, meanwhile, plans to raise as much P26.6 billion in proceeds. Its initial portfolio comprises of 14 PEZA-accredited assets with over 400,000 sq. m. of GLA.
Other property firms have also expressed interest in conducting REIT offerings, including Megaworld Corp. and SM Prime Holdings Inc.