SINGAPORE (July 21): On July 11, the Philippines’ Securities and Exchange Commission (SEC) approved an initial public offering (IPO) for Ayala Land’s REIT subsidiary, AREIT, the first of its kind in the country and sets the pace for more REIT listings.
Ayala Land will offer up to 502.6 million shares in the new AREIT, according to filings submitted to the SEC. Each share will be priced at a maximum of PHP30.05 pesos, raising up to PHP13.7 billion. The REIT is set to list on August 13 with an indicative yield of 5.4-6.3%. Primarily an office REIT, about 59% of its total GLA of 152,756 sqm is leased out to business process outsourcing or BPOs. Part of the proceeds will be used to acquire Teleperformance Cebu, a commercial asset, post listing.
The Philippines is the fourth Southeast Asian country to start its own REIT market. In 2014, Thailand allowed the conversion of its property trusts into REITs. Singapore had its first REIT listing in 2002, and Malaysia in 2005. India’s REIT framework enabled the listing of Embassy REIT in April 2019.
The Philippines has offered a legal framework for listing REITs on the stock market since 2009 with The Real Estate Investment Trust Act of 2009. In Jan and Feb this year, the SEC and Philippine Stock Exchange (PSE) relaxed some requirements leading to the AREIT IPO.
Under the Revised Rules, the minimum public ownership has been lowered to around one-third of the REIT’s units outstanding, down from 40%. Value-added tax of 12% is not required for transfer of properties to the REIT. However stamp duty is still charged on sale of transfer of property to a REIT, albeit at a 50% discount.
Increasingly, regional REIT frameworks are catching up with Singapore, which was dealt a blow this year as the Criminal Affairs Department or CAD swooped in on Eagle Hospitality Trust, which in turn had used significant financial engineering to siphon funds out of the Republic. As some S-REITs resort to financial engineering to boost valuations, other more transparent REIT jurisdictions may offer more attractive listing venues.
This year, Singapore has had two REIT listings, Elite Commercial REIT and United Hampshire US REIT listed in Feb and March respectively and raised GBP130.91 million and US$323.59 million respectively.
