More firms seen launching REITs

By Keren Concepcion G. Valmonte, Reporter

THE SUCCESS of recent initial public offerings (IPOs) of real estate investment trusts (REITs) may encourage more companies to consider offering the investment vehicle, analysts said.

Despite the pandemic, four REIT companies have listed at the Philippine Stock Exchange this year, the latest of which was the Megaworld Corp.-sponsored MREIT, Inc.

“So far, REITs are performing well in the market, except DDMP REIT, Inc. (DDMPR), all of which are posting gains versus their offer price,” Claire T. Alviar, senior research and engagement officer at Philstocks Financial, Inc., said in a Viber message on Saturday.

“This success of REITs entices more firms to tap the REIT market,” she added.

MREIT on Friday debuted at the stock market, with shares closing at P16.70 each from its P16.10 listing price. MREIT raised over P15 billion from its IPO, the second biggest from a REIT so far.

The country’s largest REIT, RL Commercial REIT, Inc. (RCR), raised P23.5 billion last month, while Filinvest REIT Corp.’s IPO generated P12.6 billion in August.

DDMPR made its market debut in March, raising P14.7 billion from its IPO.

Shares in AREIT, Inc., sponsored by Ayala Land, is up nearly 50% from its P27 offer price last year. 

“Philippine REITs are likely to soar and reach new heights with the global economic recovery benefitting the BPO (business process outsourcing) sector growth, enabling high cash yield and capital value appreciation potential for investors that eventually will include long term money holders such as pension funds and insurance companies,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a separate Viber message on Saturday. 

The Philippine Stock Exchange has also encouraged small and medium property developers to consider tapping the REIT market in order to generate capital for their projects.

“This is another way for the sponsors to raise capital that could help for their recovery from the pandemic,” Ms. Alviar said.

However, the track record of sponsor firms would be important for REIT investors.

“REITs are recommended for the long term and for those who want a consistent dividend so having sound fundamentals and a strong portfolio are important for REITs that investors would consider,” said Ms. Alviar.

DDMPR’s sponsor, DoubleDragon Properties Corp. is partnering with Jollibee Foods Corp. for the country’s first industrial REIT via DoubleDragon’s industrial leasing subsidiary, CentralHub Industrial Centers, Inc. The two plan to register CentralHub as a REIT firm in 2022.

“The rise of REIT listings in the local scene may entice more foreign investors to participate in the local markets, which in effect helps in the growth of the country’s real estate industry,” Timson Securities, Inc. Trader Darren Blaine T. Pangan said in another Viber message on Saturday.

Aside from property firms, renewable energy company Citicore Power, Inc. is planning to tap the REIT market with eight solar farms in its initial portfolio. Citicore aims to raise P8 billion to P10 billion to fund the development of 15 solar farms.

Securities and Exchange Commission (SEC) Chairman Emilio B. Aquino has welcomed the rise of the REITs, calling it a “viable alternative to pulling away investible money from scams and all sorts of risky investment products” that are being propagated online.

“This is what the SEC wants to see — investible funds being allocated into more productive and income-producing ventures such as the real estate and infrastructure projects of the REIT sponsors, rather than being wasted in scams,” said Mr. Aquino during the listing ceremony of RCR on Sept. 14.