Ayala Land, Inc. (ALI) has applied for the real estate investment trust (REIT) offer in the Philippines. It was the first application submitted to the Securities and Exchange Commission. The subsidiary of ALI, which is AREIT, Inc. was the one who applied for the REIT last Jan 7, 2019. The application disclosed that it is going to offer up to 478,639,700 shares at the price of P30.05 each. The company expects that this will give them up to P1.356 billion as net proceeds. Who’s excited about this news? I bet those who are looking forward to REITS can now see the light!
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ALI said that the offer will compose of 478,639,700 shares at P30.05 each. There will be 47,864,000 new common shares and 430,775,700 existing common shares, and 23,932,000 shares for over-allotment option. This enables the company to pave the way for the development of a REIT market in the Philippines. It also expects that this is going to be another milestone to the Philippine stock market. The initial public offering of AREIT will be done once the regulatory approvals are obtained from the Philippine Stock Exchange and SEC.
The prospectus of AREIT stated that the REIT plan will have 3 commercial buildings: the five-story McKinley Exchange, the 24-story Solaris One, the mixed-use development Ayala North Exchange. These are considered as Grade A office assets all located in Makati central business district. Its portfolio will continue to expand with the company’s new acquisitions in the future. The proceeds from the offer will be used by the end of 2020 to follow the guidelines of the REIT here in the Philippines. 90% of the proceeds, which is P1.22 billion, will be for the future investments in real estate, and the remaining 10%, which is P136 million will be for general corporate purposes.
ALI’s filing of application is considered to mark the first-ever successful attempt to register a REIT after 10 years since the law has passed. This is good timing since the REIT regulations have been relaxed recently, giving flexibility companies that are planning to become REITs. According to the new law, the minimum public float requirement is now 33% and the 12% VAT has been removed. There are also other firms that showed their interest in REITs including Megaworld, Robinsons Land, and CPG.