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Ayala-Backed AREIT Sets Share Price for Its IPO

Offer period starts on Monday, July 27.
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The first real estate investment trust (REIT) to debut in the Philippine Stock Exchange has priced its initial public offering (IPO) at P27 per share. 

AREIT Inc, which is sponsored by Ayala Land, said it will offer a maximum of 502.57 million shares, which include the overallotment option of 45.69 million shares.

In the company’s registration statement that was approved by the SEC and the PSE, the offering covers up to 47,864,000 new common shares and up to 409,019,000 existing common shares for public offering, with an overallotment option of up to 45,688,700 secondary shares. The maximum offer price was P30.05 apiece, but this has been reduced to the current P27 per share.

 Also read: DoubleDragon Eyes P17 Billion IPO for its REIT as SEC Clears Ayala Land’s REIT IPO

In a disclosure to the PSE on Thursday, July 23, AREIT said its REIT “shall provide a new asset class to the public, allowing investors to diversify their portfolio and democratize ownership of real property assets in the Philippines.”

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The ompany said it intends to use the net proceeds from the primary offer to fund the intended acquisition of Teleperformance Cebu from ALO Prime Realty Corporation, a wholly-owned subsidiary of AREIT’s sponsor, Ayala Land Inc. (“ALI”), or an alternative property from ALI, or any of its subsidiaries or affiliates.

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Meanwhile, the net proceeds from the secondary offer shall be reinvested by ALI, as sponsor to AREIT, in real estate projects located in the Philippines within a period of one (1) year, as required under the Revised Implementing Rules and Regulations (IRR) of Republic Act No. 9856, or the REIT Act of 2009.

The offer period will run from 9 a.m. on Monday, July 27 to 12 noon of Monday, August 3. The target listing of AREIT’s shares will be on August 13, 2020. 

What are REITS

REITs are essentially corporations that manage real estate assets that produce regular income such as hotels, apartment buildings, office and commercial buildings, and shopping malls. According to the SEC, besides providing real estate companies a cheaper source of capital and promoting economic development, growth in tourism and liquidity in the capital markets, REITs allow both small and large investors to participate in the direct ownership of real estate and is an alternative investment instrument to foreign investors as well as OFWs.

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Paul John Caña
Associate Editor, Esquire Philippines
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