PSE approves REIT IPO of Ayala Land

MANILA, Philippines - The Philippine Stock Exchange Inc. has approved the initial public offering (IPO) of Ayala Land Inc.’s AREIT Inc., the first real estate investment trust or REIT to be listed in the PSE.

PSE president and CEO Ramon Monzon said this marks a milestone in the capital market, expressing hopes that despite the COVID-19 pandemic, AREIT’s listing would pave the way for other property firms to list in the market.

“We are excited over the prospects of the REIT sector now that we have a first mover in REIT listing,” Monzon said.

AREIT will be offering a total of 502.57 million shares, inclusive of the over-allotment option of 45,688,700 shares. AREIT shares have an indicative price of up to P30.05 per share. This could raise up to P15.1 billion.

The final offer price will be determined after the company’s book building process.

AREIT’s offer period will run from July 27 to Aug. 3.

As an asset class, REITs are required to declare dividends of at least 90 percent of its distributable income.

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, Monzon also said.

For one, he noted that REITs may help boost 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.

“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,” Monzon said.

To encourage participation of local small investors as with other IPOs, AREIT’s offering will have a local small investor (LSI) tranche, wherein 10 percent of the offered shares will be allocated to small investors.