By RUELLE CASTRO and ANGELA CELIS
Amid a somber debut of the latest real estate investment trust (REIT) to list with the Philippine Stock Exchange, the Department of Finance (DOF) believes the increasing number of REIT listings in the country is a stamp of approval on the country’s fundamentals amid the current crisis.
The share price of DDMP REIT Inc., the real estate investment trust (REIT) arm of Edgar Sia II’s DoubleDragon Properties Corp., closed unchanged on its maiden trading day yesterday, initially hitting a high of P2.40 per share before continuously dropping back to its initial public offering price (IPO) of P2.25 Tuesday.
The REIT company raised P14.71 billion by offering to the public 6.53 billion of its shares to the public, divided into a firm offer of 5.94 billion shares and another 594.25 million shares covering the greenshoe option, all secondary shares owned by DDMP owners DoubleDragon, Benedict V. Yujuico and Teresita M. Yujuico.
Finance Secretary Carlos Dominguez, however, said listing of DDMP and of REIT pioneer Ayala Land Inc.-owned AREIT Inc. middle of last year, are an indication of a “strong confidence” by investors in the Philippines’ economic recovery.
Dominguez said the reforms to fix the flawed regulatory framework under the over decade-old REIT Act cleared the way for this “powerful financial mechanism” to broaden access to investments and become an indispensable tool in rebuilding the economy.
When the government was able to resolve last year the issues that prevented REITs from taking off since its law was enacted in 2009, two major property developers were able to successfully list their REIT offerings in the stock market, Dominguez said.
“As with the previous initial public offerings (IPOs) made during the pandemic, DoubleDragon’s REIT listing reflects the strong confidence of our investors in our economic recovery,” said Dominguez, adding DoubleDragon was able to successfully launch last year, in the middle of the pandemic, the IPO of its MerryMart Consumer Corp., a retail company principally engaged in the operation of grocery stores.
DoubleDragon’s REIT is the largest issuance so far.
AREIT raised P13.6 billion in its IPO last year.
“At this particular time in our history, REITs are indispensable to rebuilding a strong and truly inclusive economy for our people. These will make available huge volumes of capital to our financial system that will help fund our long-term growth,” Dominguez said.
The finance chief noted that when the REIT Law was passed in 2009, no company found its terms attractive, owing to what property players cited as friction costs, minimum public ownership requirements, and taxes as obstacles for the REIT to flourish in this country.
“We took on the challenge of crafting a regulatory framework for this financial instrument that is right for the country,” Dominguez said.
He said the government also ensured all shareholder proceeds from REIT offerings will be retained within our domestic economy and used to drive the country’s growth.
In keeping with this provision in the law’s implementing rules and regulations, Dominguez said majority of DoubleDragon’s REIT proceeds will be infused as equity into its CentralHub Industrial Centers Inc. to carry out the company’s plan to build a chain of modern industrial warehouse complexes in strategic locations across the country.
DoubleDragon earlier said it expects to spend the proceeds to invest in four office towers in Manila, three hotel development in Boracay, Mactan, and Baguio and 20 new warehouses around the country.
AREIT said tthe infusion of P15.46 billion worth of new properties into its portfolio by Ayala Land through a share for property swap transaction will add 205,000 square meters (sq.m.) of leasable space, primarily composed of office leasing properties located within Ayala Land’s prime estates into its assets.
The shares to be swapped will be sourced from the planned increase in AREIT’s capital of P29.5 billion divided into 1.51 billion shares, from P11.74 billion divided into 1.02 billion shares.
The property-for-share swap transaction and the increase in capitalization will have to be approved by AREIT shareholders on their first annual meeting on April 23, 2021.
If the transaction is approved, Ayala Land will own approximately 66 percent of AREIT. It currently owns 45.04 percent of AREIT based on the company’s latest regulatory filing.
