Property developer Ayala Land Inc. plans to raise $500 million from the country’s first real estate investment trust listing.
Ayala Land president and chief executive Bernard Vincent Dy said in an interview following the annual stockholders’ meeting the company would file with the Securities and Exchange Commission its REIT application to offer office assets in the Makati central business district.
Dy said the REIT application, the first in 10 years after the REIT law was passed, would be filed under the current rules which require public ownership of 67 percent.
“We feel that it is a very good vehicle for us to be able to recycle capital and we are also looking at it as a new business model to be able to grow this REIT as another leg for growth,” Dy said.
Ayala Land head of commercial business and senior vice president Jose Emmanuel Jalandoni said the company was working with BPI Capital as the underwriter for the offering.
“We are testing the framework so we will start with few assets only primarily in Makati CBD assets,” Jalanadoni said.
Dy said there was a strong demand from investors in REIT.
The Aquino administration approved the REIT law in 2009 to boost liquidity in the stock market and enhance the quality of the domestic financial market, giving local investors more funding options.
REIT gives investors the option to invest directly in the finished products that are already earning money―such as residential and office units, hotels or shopping malls or even infrastructure ventures like toll roads and power plants―and not just the property developer.
This was meant to attract investors because the law requires the distribution of 90 percent of income yearly. However, tax issues and the imposition of 67-percent public ownership requirement discouraged real estate companies from taking advantage of it.
The Duterte administration is currently reviewing the REIT law with the end view of reducing the required minimum public ownership to 33 percent.
Jalandoni said Ayala Land was prepared to push through with its planned REIT listing even if the government decided not to reduce the public ownership requirement.