REITs gain traction, diverting public from scams – Manila bulletin
The Securities and Exchange Commission (SEC) finds that real estate investment trusts (REITs) are growing in popularity with investors and preventing them from wasting hard-earned money on scams.
âREITs are proving to be very attractive to local retail investors. On average, more than half of the investments in the first three IPOs of REITs, or 53% to be exact, were placed by individuals, âsaid SEC Chairman Emilio B. Aquino.
He said: “This momentum is expected to continue on RLC REIT’s retail offering which we are aware has seen oversubscription in the tranche of trading participants with 116 eligible brokers participating in the transaction.”
Aquino noted that âthis wide participation of retail investors in IPOs of REITs achieves one of the objectives of the REIT Act of presenting REITs as a vehicle for the democratization of wealth in the country.
It also shows the potential of REITs as a viable alternative to extract investable money from scams and all kinds of risky investment products peddled on the internet and social media.
“This is what the SEC wants to see – investable funds being allocated to more productive and income-generating businesses such as real estate and infrastructure projects of REIT developers rather than being wasted on scams,” he said. said Aquino.
REIT’s IPOs are also a viable capital raising program for selling shareholders, sponsoring real estate companies.
In the case of RL Commercial REIT (RCR), REIT’s largest IPO to date, its sponsor Robinsons Land Corporation was able to attract 23.5 billion pesos for the secondary sale of the offered shares.
“Adding this to the 39.6 billion pesos raised by the sponsors of FPI’s three previous IPOs, expect a huge amount totaling 63.1 billion pesos to be pumped back into the economy,” Aquino said.
He noted that “the attractive message here is that sponsoring real estate companies are offered a feasible funding channel for their future projects through the formation of real estate investment companies.”
This funding substitute serves another REIT law goal of recycling capital through the sponsoring real estate company reinvestment program, Aquino said.
Meanwhile, RCR’s listing increases the total market capitalization of PSE-listed REIT companies to 171.3 billion pesos from 107.1 billion pesos.
âThis represents 0.91% of the total PSE market cap, a jump of 34 basis points from the 0.57% level represented by the three previous REIT listings,â Aquino said.
He added that âremarkably, the sustained growth of the local REIT market is crucial for expanding and opening new horizons for our capital market.
âWe want to see the REIT sector open a new window of investment for foreign investors, inspire the formulation of a new sectoral REIT index and trigger the formation of an Exchange Traded Fund made up of REIT-listed companies.â
Aquino said the SEC hopes that REITs continue to thrive and significantly promote the development of our capital markets.
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