By Denise A. Valdez, Reporter
AYALA LAND, Inc. (ALI) is keeping its real estate investment trust (REIT) plan on the table despite challenges brought by the coronavirus disease 2019 (COVID-19) pandemic.
Ayala Land Offices Head Carol T. Mills told BusinessWorld that ALI continues to coordinate with the Securities and Exchange Commission (SEC) regarding its REIT application.
“ALI is still pursuing and we are keeping our REIT application with the SEC updated and active,” she said in an e-mail Monday.
But she noted the timing of the offering will depend on market conditions.
ALI filed its REIT application with the SEC in February to do a primary offer up to 478,639,700 shares, a secondary offer of up to 430,775,700 shares, and an over-allotment option of up to 23,932,000 shares, with each share priced at P30.05, which would raise up to P15.1 billion in net proceeds.
This is the country’s first REIT application, following the SEC’s adjusted REIT guidelines launched in January.
ALI’s REIT plan involves three commercial buildings in Makati central business district: the 24-storey Solaris One, the mixed-use development Ayala North Exchange, and the five-storey McKinley Exchange.
Based on its prospectus, ALI wants to use proceeds from the offer for future investments in real estate and general corporate purposes. It is planning to buy Teleperformance Cebu from its subsidiary ALO Prime Realty Corp. and other real estate properties in Metro Manila and key regions.
While REITs are ideally a viable investment opportunity because it allows people “to be invested in real estate without having to worry about fake titles or managing properties,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said the ongoing pandemic may scare investors away.
“REITs value is derived from rental income and the value of the underlying assets. Not sure how investors will accept an offering at this time,” he said in a text message on Monday. “Given the uncertainties resulting from the pandemic, many investors will probably be leaning towards keeping liquid.”
Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan said the same thing, noting if the quarantine will last any longer, it may be a challenge for ALI to attract investors.
“How will REIT be a viable investment instrument for investors if office spaces, malls and residential spaces are not utilized due to the quarantine measures by the government?” he said in a text message.
But Mr. Tan said if it pushes through, ALI’s offering would be an opportunity for investors with different risk appetites, like conservative ones and institutional investors, because REITs give regular dividends to shareholders.
“Stocks in real estate are so attractive because of the [industry’s] growth… If we are able to contain this virus, have a vaccine or a cure for this, I think the economy will bounce back, including real estate, like a ‘V-Shape’,” he said.
PNB Securities’ Mr. Lisbona also said if ALI’s offering becomes successful, it will help provide liquidity for its REITs’ operations and funding for future acquisitions in anticipation of lower property prices.
ALI said last week it is deferring all project launches this year to trim costs and keep liquidity amid the ongoing COVID-19 pandemic. It also slashed its budget for capital expenditures to P70 billion from the original P110 billion.
Earnings of the company grew 13% to P33.2 billion last year due to higher contributions from new leasing formats. Shares in ALI at the stock exchange grew 30 centavos or 1.04% to P29.20 each on Monday.