By Madelaine B. Miraflor
Ayala Land, Inc. (ALI) has decided to list the first Real Estate Investment Trust (REIT) issuance in the Philippines a decade after the highly contested REIT law was put in place — a move that will help the listed property giant initially raise as much as US$500 million.
Jose Emmanuel Jalandoni, ALI Group Head for Commercial Business Group, said on Wednesday that ALI wants to make the country’s first REIT issuance within the year even amid ongoing efforts to revise some provisions in the REIT law.
REIT is an investment option that would allow the public to buy a stake in real estate projects, but a decade since REIT law’s enactment in the Philippines, no one has yet participated in the scheme because of regulatory and tax issues.
There is now efforts within the government to come up with a new set of rules for REIT listings within the second quarter of the year, which plans to address the clamor for lower minimum public ownership (MPO) rule and reduction of tax penalties for REIT companies.
ALI President Bobby Dy said even with the current rules, the company decided to proceed with its first REIT listing because “we feel it’s a new vehicle for us to be able to grow”.
Passed in 2009, the REIT Act allows companies to raise funds by selling its property assets to the public, which would be listed in the Philippine Stock Exchange (PSE).
Based on the amended Implementing Rules and Regulations (IRR) of the REIT law, REIT companies should have a minimum 44 percent public float for the first year of their listing. They should give up majority ownership of about 67 percent in favor of the public three years after the listing.
“It’s a dialogue that’s been there for the past years. As a company, we said why not go ahead and test it and our underwriter BPI [Bank of the Philippines] said there is demand,” Jalandoni said.
What ALI recently did was it filed an application to the Securities and Exchange Commission (SEC) to amend the name of an existing company in order to make it the main vehicle for its REIT issuances.
Within the month, the company should come up with the prospectus for the issuance, which would specify which ALI assets should be listed under REIT.
This would also need SEC and PSE approval.
“We are testing the frameworks so we are listing a few assets, primarily office assets in Makati,” Jalandoni said.
When sought for comment, a top official from ALI’s competitor in the local property market, SM Prime Holdings Inc., said the company is not interested to venture into REIT under the current rules.
“We will just let them [ALI] go first. And we will think what’s the right time for us,” SM Prime president and chief executive officer Jeffrey Lim said.