AREIT Inc., the real estate investment trust unit of Ayala Land Inc., has tightened the indicative price range for its initial public offering (IPO).
This developed as the first real estate investment trust (REIT) IPO in the country got its second regulatory approval, this time from the Philippine Stock Exchange (PSE).
An investors note from BPI Capital Corp., joint-bookrunner for the IPO, showed AREIT’s share sales will now be priced between P25 and P29.50, lower than what the company announced at “up to P30.05” per share.
The offer is divided into an initial 47.86 million primary shares and another 409.02 secondary shares for the firm offer, and another 45.69 million secondary shares covering the overallotment option. Ayala Land, the REIT sponsor, is also a selling shareholder in the IPO.
AREIT will have its IPO run between July 20 and August 3, 2020 with listing eyed on Aug. 13, 2020.
The IPO will generate P14.82 billion in gross proceeds, of which P1.41 billion will accrue to AREIT.
AREIT will use the proceeds for the expansion of its building portfolio through the acquisition of a fourth building, Teleperformance Cebu, excluding the land, from a subsidiary of Ayala Land.
Post-IPO, the public will own 49 percent of the Ayala Land REIT, while Ayala Land will retain a 41.61 percent. Its subsidiary AyalaLand Offices Inc. will own the remaining 9.39 percent.
Aside from being a joint-underwriter, BPI Capital serves as the sole global coordinator for the share sale, and is joined by UBS AG Singapore Branch as bookrunner, and together with PNB Capital and Investment Corp., and SB Capital Investment Corp., form the underwriter syndicate for the IPO
Ramon . Monzon, PSE president, said AREIT’s IPO sets a milestone in the capital market.
“We are excited over the prospects of the REIT sector now that we have a first mover in REIT listing,” he said.
“We are pleased that AREIT has decided to pursue its IPO even under the present economic challenges brought about by the COVID-19 pandemic. We are optimistic that the company’s IPO will pave the way for other property firms, even those that are not yet listed in the PSE, to consider listing REITs,” he added.
As an asset class, REITs are required to declare dividends of at least 90 percent of their 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. Furthermore, 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,” said Monzon.