AREIT Inc., the pioneering real estate investment trust (REIT) firm to bet on the Philippine REIT market, closed at P24.90 per share on its maiden listing, down P2.10 from its initial public offering (IPO) price of P27 per share.
This is amid hopes its listing will perk up future REIT offerings in the Philippines.
Between July 20 and Aug. 3, 2020, the Ayala Land Inc. (ALI) unit sold to the public an initial 47.86 million primary shares and another 409.02 secondary shares at P27 apiece, grossing for the company P12.33 billion in proceeds.
Another 45.69 million secondary shares were made available to cover the overallotment option of the IPO. ALI, as the REIT sponsor, is a selling shareholder in the IPO.
AREIT will gross P1.29 billion from the overall IPO proceeds, with the rest going to Ayala Land, which will be used to fund the acquisition of sister company Teleperformance Cebu from ALO Prime Realty Corp., an alternative property from ALI, or any of its subsidiaries or affiliates, that “financially and strategically meets or exceeds Teleperformance Cebu and AREIT’s financial and strategic investment criteria.”
ALI in a statement said the proceeds that will accrue to its balance sheet shall be reinvested in “real estate projects located in the Philippines within a period of one year from receipt thereof, consistent with applicable rules and regulations.”
“Overall, REITs will revitalize the capital markets, promote financial inclusion and give investors new income opportunities. We hope to generate awareness and interest for REITs to encourage other companies to participate,” said Fernando Zobel de Ayala, ALI president.
“With the Ayala Land REIT, we hope to provide investors with a solid investment instrument. It is aligned with the best REIT practices in the region. Unique to AREIT is a chance to buy into Ayala Land’s Grade A office buildings in the Makati central business district,” Zobel added.
Finance Secretary Carlos Dominguez III said AREIT’s IPO “signals that the domestic market is ready to resume business amid the challenges arising from the coronavirus-induced global health and economic crisis.”
Dominguez said the country’s first REIT will deliver to the economy a “powerful financial concept” that aims to promote “greater inclusiveness in the financial system among Filipinos as it will democratize wealth by opening for thousands of small investors the opportunity to invest in secure and profitable real estate projects.”
“This public offering is a strong vote of confidence in our good economic prospects and in the resiliency of many of our industry sectors, some of which will be occupants of Ayala Land Inc.’s REIT properties,” Dominguez in a videotaped message to participants of AREIT’s virtual listing ceremony at the Philippine Stock Exchange.
“It shares in the optimism that, notwithstanding the global economic downturn today, the Philippine economy has strong fundamentals to rise quickly from the devastation brought about by the global health emergency,” he added.