By Keren Concepcion G. Valmonte
THE growing number of companies offering or expressing interest in tapping the real estate investment trust (REIT) market signal confidence in the capital market, but their dividends will be watched by investors, analysts said.
“It shows that companies feel that the capital market is a good place to raise money, and it also shows that there are available investors ready to take them,” Juanis G. Barredo, chief technical analyst of COL Financial Group, Inc., said in a Viber message last week.
“If they feel or sense otherwise, they [will] defer such offerings,” he added.
Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said seeing more companies offer REITs is “a good signal on the further progress and development of the country’s capital market.”
DoubleDragon Properties Corp. debuted its REIT at the stock exchange in March to hold the record number of small investors. Listed 17.83 billion shares were priced at P2.25 each.
In the same month, Filinvest Land, Inc. subsidiary Cyberzone Properties, Inc. filed for the registration statement of its REIT initial public offering (IPO) with the Securities and Exchange Commission (SEC). The company is also in the process of applying to change its name to Filinvest REIT Corp.
Cyberzone Properties’ REIT portfolio will include 16 office towers, which includes a space for retail in Northgate Cyberzone and a Cebu-based office tower with a retail component.
Robinsons Land, Corp.’s subsidiary Robinsons Realty Management Corp. also filed a REIT IPO registration statement with the SEC last week, and is seeking to change its name to RL Commercial REIT, Inc. (RLC REIT). Its REIT includes 14 assets accredited by the Philippine Economic Zone Authority. It has more than 400,000 square meters of gross leasable area in Metro Manila and commercial centers beyond the region.
Meanwhile, both Megaworld Corp. and Vista Land & Lifescapes, Inc. have expressed interest in tapping the REIT market.
“I guess with the success of raising money and with the so far good motions of AREIT, [Inc.], some will try to imitate this success,” Mr. Barredo said. “But they have to have a good and solid growth and dividend proposition to make it worthwhile.”
AREIT is Ayala Land, Inc.’s REIT and is also the country’s first-ever REIT listing, which debuted on the stock market in August last year.
RCBC’s Mr. Ricafort said a REIT issuance will be a “win-win” for both the issuers and the investing public.
“REITs allow the investing public to earn much higher dividend yields at a time when interest rate returns or bond yields still remain near record lows,” he said in a text message.
He added that REITs also allow owners or companies to raise more funds “in an innovative manner based on selected/specific commercial properties offered.”
DIVIDENDS OF REITS
“Once many begin to list, it will boil down to who shows better return promise,” Mr. Barredo said. “If more than one offering comes in a two-month period or so it may be more draining to the market and curtail the upsides of an offering due to the limited demand.”
Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message that investors should evaluate the following before investing in a REIT: the type of projects being listed, the tenants and the rental income, the dividend payment, and if the company aims to add projects to their REIT portfolio.
REIT investors earn through the income generated from leases and other gains from commercial real estate.
For its part, the Philippine Stock Exchange (PSE) wants to encourage other companies from different industries to offer REITs, such as toll roads, warehouses, and hospitals.
“It could be many things, that’s the growth area that we want to look at right now,” PSE President and Chief Executive Officer Ramon S. Monzon said in a video call on Thursday.