Ayala Land files Philippines’ first REIT listing

Ayala Land Inc. has commenced its move to be the very first property company to list its assets under the Real Estate Investment Trust (REIT) framework —more than a decade after a law was passed by Congress.

In a statement, the Securities and Exchange Commission (SEC) said it has received the application of “what could be the county's first real estate investment trust (REIT)."

Ayala Land, in a separate disclosure, said its subsidiary AREIT Inc. - previously known as AyalaLand REIT Inc. and One Dela Rosa Property Development Inc. - filed its application for a REIT offering to the SEC.

The application came after the release of the revised Implementing Rules and Regulations (IRR) of Republic Act No. 9856 or the Real Estate Investment Trust Act of 2009 last Jan. 20, 2020.

The REIT Act was passed in 2009, which would have allowed companies to list its real property assets on the Philippine Stock Exchange as a new vehicle to raise funds for other investments and expansion initiatives.

Ten years after the law was enacted, the REIT framework faced issues such as the 67-percent minimum public ownership requirement as well as taxes on property transfers and additional income generated.

The revised IRR settled longstanding issues on the REIT framework.

The SEC and the Bureau of Internal Revenue (BIR), with the approval of the Department of Finance (DOF), issued amendments to the implementing rules and regulations of the REIT Act.

Among others, the SEC lowered the minimum public ownership requirement in line with the provision of the REIT Act that a REIT must have at least 1,000 public shareholders each owning at least 50 shares of any class of shares and, in aggregate, at least one-third of the outstanding capital stock.

Meanwhile, the BIR removed the 12% VAT previously imposed on the transfer of properties to a REIT in exchange for its shares, provided the exchange should result in an acquisition by the transferor of at least 51% of the outstanding voting capital stocks of the transferee.

The Philippine Stock Exchange also issued amendments to the Listing Rules for REITs to provide for the appropriate mechanism, internal controls and procedures to monitor the compliance of REITs with the applicable rules and regulations.

The REIT is a new asset class that provides investors with dividend-based income, inflation protection, and portfolio diversification, according to Ayala Land.

It broadens investment options for Filipinos, opening the opportunity to own a stake in high-value real estate assets in the country, the property firm sad.

AREIT will offer up to 478,639,700 shares, consisting of 47,864,000 new common shares, 430,775,700 existing common shares and up to 23,932,000 optional shares for overallotment.

AREIT set the maximum price of the offer at P30.05 per share to raise a total of P1.356 billion in net proceeds to be used for future investments in real estate properties in Metro Manila and other key regions in the Philippines.

Currently, the company's portfolio consists of three commercial buildings in Makati City, namely Solaris One, Ayala North Exchange and McKinley Exchange.

Ayala Land said its initiative to pioneer REITs in the Philippines “reflects its confidence in the local economy.”

Through this initial capital market transaction, Ayala Land said it hopes to pave the way for the development of a REIT market in the country, bringing another milestone to the Philippine stock market.

“The company seeded AREIT Inc. with Grade A office assets located in Makati CBD and is expected to expand its portfolio with new acquisitions in the future,” the company said.

Ayala Land said it is seeking to do an Initial Public Offering (IPO) of AREIT Inc. after receiving the regulatory approvals from the SEC and the PSE. —LDF, GMA News