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Ayala Land plans to raise P25-26B in country’s first REIT offer

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Ayala Triangle Park Makati
BW FILE PHOTO

By Arra B. Francia
Senior Reporter

AYALA LAND, Inc. (ALI) is preparing what could turn out to be the country’s first real estate investment trust (REIT) offering, where it plans to raise about P25-26 billion.

“We filed with the SEC (Securities and Exchange Commission) an Ayala Land REIT; we’re still thinking what the name should be. The intent is to list based on the current regulations which is a minimum public ownership of 67%,” ALI Commercial Business Group Head Jose Emmanuel H. Jalandoni said in a media briefing after the company’s annual shareholders’ meeting in Makati Wednesday.

Mr. Jalandoni said the company has filed for the name change of an existing company, One dela Rosa Development, Inc., into Ayala Land REIT Inc., which will now serve as the vehicle for the REIT listing. ALI has also filed amendments to its articles of incorporation to reflect its intention to file for REITs.

The SEC Office of the Commission Secretary said that it received the company’s application for ALI’s amendments to articles of incorporation on Feb. 15, while the change-in-name notice was submitted on March 28.

The listed property developer will have to file a registration statement for the REIT once it gets clearance from the SEC for the said amendments.




After the SEC, it will then have to get clearance from the Philippine Stock Exchange.

“We feel like it’s a very good vehicle for us. We’ll be able to recycle some capital, but we’re also looking at it as a new business model for us to be able to grow this REIT into another leg for the organization,” ALI President and Chief Executive Officer Bernard Vincent O. Dy said in the same briefing.

The REIT will be anchored on ALI’s office towers located in the Makati Central Business District.

Mr. Jalandoni said they can also use the firm to acquire third-party assets.

“It doesn’t mean that the only assets that we will put in this vehicle are the Ayala Land assets. We could actually explore third-party assets as well to be used into this REIT vehicle,” Mr. Jalandoni said.

The company has engaged the Bank of the Philippine Islands as the transaction’s underwriter.

‘LET’S JUST GO AHEAD AND DO IT’
Should the listing push through, this will be the first REIT vehicle in the country 10 years after Republic Act No. 9856, otherwise known as The Real Estate Investment Trust (REIT) Act of 2009, was enacted.

The SEC approved the implementing rules and regulations for the REIT Law back in 2010, which states that a REIT must have a minimum public ownership of 40% on its initial year of listing. This must be raised to 67% on the second year.

Market players previously raised concerns about the high level of public ownership and taxation issues required for REITs.

The SEC has since favored a lower public float of 33%, while the 12% tax on transfer of real properties has been removed under RA 10963, or the Tax Reform for Acceleration and Inclusion Act that took effect in January last year.

However, the SEC has yet to come out with the revised guidelines as the Department of Finance wanted assurance that the funds raised through REITs will not be spent outside the country.

“If they don’t revise, we’re fine because we’re ready to accept. If they do revise we’re also fine. As a company, we said let’s just go ahead and do it,” Mr. Jalandoni said when asked whether they will still push through should the SEC release new guidelines.

“The primary reason is we just want to move forward and test the framework. It’s good for the investing public to have these options.”

Shares in ALI jumped 2.13% or P1 to close P48 each at the stock exchange on Wednesday.