Property giant Ayala Land Inc. has obtained approval from the Securities and Exchange Commission (SEC) to bring to public hands the country’s very first real estate investment trust (REIT) that will raise as much as P15.1 billion in fresh capital for more local real estate ventures.
In its July 9 meeting, the SEC en banc approved the registration statement of Ayala Land-sponsored AREIT Inc. for an initial public offering (IPO) of as much as 502.57 million common shares at a maximum offer price of P30.05 each.
The offer consists of a primary offering of up to 47.86 million new common shares and up to 409.02 million secondary shares, with an overallotment option of up to 45.69 million shares. This will bring to public hands about 49 percent of AREIT if the overallotment option is exercised.
Subject to approval by the Philippine Stock Exchange, AREIT plans to run its public offering from July 27 to 31 and list under the ticker “AREIT” on Aug. 7. This will be the second IPO this year after the recent debut of MerryMart Consumer Corp.
Net proceeds from AREIT’s offering of secondary shares will be reinvested by parent firm Ayala Land in other local real estate and/or infrastructure projects within a year, as required by existing regulations.
On the other hand, net proceeds from the primary offer will be used by AREIT for the expansion of its building portfolio through the acquisition of a fourth building, Teleperformance Cebu, excluding the land, from a subsidiary of the sponsor or an alternative property from the sponsor or any of its subsidiaries or affiliates.
REIT is a corporation that primarily invests in income-generating real estates such as office spaces, shopping malls, service apartments, hotels, hospitals and warehouses. It gives investors an opportunity to invest directly in the finished projects rather than in the developer itself. This was meant to attract dividend-seeking investors because the REIT law requires the distribution of at least 90 percent of income as dividends annually.
The REIT Act, passed by Congress in 2009, allows REIT companies to list and trade its shares of stock, allowing developers to recycle capital for further property development and expansion initiatives.
The SEC said on Friday it would issue the corresponding order of registration and the permit to offer securities for sale upon a determination that the company, formerly known as One Dela Rosa Property Development Inc., has complied with the remaining requirements.