3 property giants tap advisers for planned REIT offerings

MANILA, Philippines - Three of the country’s biggest corporations – Ayala Land Inc., SM Prime and Robinsons Land Corp. – have appointed their respective advisers for their planned real estate investment trust (REIT) offerings possibly within the year.

ALI, SM Prime and RLC, which are reportedly in a race to be the first entity to tap the REIT market, said they are awaiting the release of the implementing rules and regulations of the REIT Act.

ALI chief financial officer Jaime Ysmael said the company has appointed UBS and JP Morgan as its joint advisors for its planned REIT listing. He said the company was earlier planning a $300-million REIT offering.

SM Prime chief finance officer Jeffrey Lim said the country’s shopping mall giant has tapped CLSA and Macquarie as advisers for its planned REIT offer of up to P500 million. He said a new firm to be called SM Prime REIT would be formed to serve as the corporate vehicle for the planned listing.

RLC president Frederick Go declined to say how much the company was aiming to raise from the REIT market but sources said the Gokongwei-owned property firm was looking at a $300-million offering. Go said it has picked Citi as its adviser.

A REIT is an instrument that trades like a stock on major exchanges. It provides small and large investors with options to participate directly in the ownership of large-scale real estate projects.

REITS have been widely adopted in the United States, Australia and more recently Japan, Singapore, Hong Kong and Taiwan. ALI, SM Prime and RLC want to take advantage of the significant tax benefits of listing REITs.

Under the draft IRR, a company applying to list REITs on the stock exchange must have a minimum capitalization of P300 million and distribute annually at least 90 percent of its distributable income as dividends to its shareholders.

A REIT may invest in real estate located in the Philippines, whether freehold or leasehold. At least 75 percent of the deposited property of the REIT shall be invested in, or consist of, income generating real estate.