RL Commercial REIT Set to Become the Country’s Largest Real Estate Investment Trust
Ph’s Largest REIT could raise as much as Php23.5 Billion
by Robinsons Land And JG Summit Teams| Aug 27, 2021
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RL Commercial REIT, Inc. (RCR), a real estate investment trust backed by the Gokongwei Group’s Robinsons Land Corporation (RLC), has set its initial public offering price at Php6.45 per share. RCR’s ongoing offer period runs until September 3, 2021, while its listing date on the Philippine Stock Exchange is tentatively set for September 14, 2021.
RCR’s IPO consists of 3.34 billion common shares with an overallotment option of up to 305 million common shares to be sold by Robinsons Land. Proceeds from the offer, which stands to raise up to Php23.5 billion, will be received by RLC as the selling shareholder, and will be reinvested according to the REIT’s Reinvestment Plan, viewable here.
Largest Market Capitalization
At the set offer price, RCR will have the largest market capitalization among the country’s listed REIT companies. “With the attractive IPO price of Php 6.45 per share, we will be starting with a market capitalization of Php 64.2 billion — the largest market capitalization among all REIT IPOs existing and upcoming so far,” said RCR President and CEO Jericho Go. At an IPO price of Php6.45 per share, RCR’s implied 2022 dividend yield is 5.96%.
Largest in Portfolio Valuation and Asset Size
As of June 30, 2021, RCR’s portfolio boasts a total gross leasable area of 425,315 square meters, with an aggregate appraised value of Php 73.9B. This represents a record-high portfolio size by GLA and appraised value among the country’s publicly listed REITs.
Widest Geographical Coverage
Consisting of 14 commercial real estate assets, RCR properties can be found in the major central business districts of Metro Manila, such as Bonifacio Global City, Makati, and Ortigas, with significant holdings also in Mandaluyong and Quezon City. RCR has also established a foothold in key cities and urban areas outside Metro Manila such as in Naga, Tarlac, Cebu, and Davao, making it the REIT with the widest geographical coverage in the Philippines.
“The bigger the size, the greater the opportunity to generate income and improve yield,” shared Go.
REITs are defined as companies that own, operate, or finance income-producing real estate ventures. In the case of publicly traded REITs, which is the aim of RCR’s IPO, they offer investors a means to invest in the real estate market, without having to buy actual property themselves. Go also noted that in the Philippines, REITs are considered income-generating instruments that are mandated to distribute at least 90% of their earnings as cash dividends to shareholders.
In relation to the group’s highly varied and well-distributed land holdings, Go says, “The diversification model of RCR is truly unmatched. A wide geographical coverage is the answer to concentration risk. If something happens to one location or city, good or bad, you don’t miss out on the good and when things go bad only portions of the portfolio, which are within that locality will be affected.”
Strong Backing from Robinsons Land Corporation
RCR enjoys the full support of Robinsons Land and has access to the real estate firm’s high-quality expansion pipeline. RLC has existing office assets and business process outsourcing spaces located within its various commercial centers, as well as projects that are in various stages of construction. As a starting point, RLC and RCR entered into a memorandum of understanding for the potential acquisition of 40,000 to 100,000 square meters of gross leasable area within the next 18 months.
Projects in the RLC pipeline provide RCR with the potential to acquire approximately 422,000 square meters in gross leasable area. “This addresses the inorganic growth opportunity for the company,” said Go. He added, “There is a clear path towards growth and profitability. The very high occupancy level of all 14 assets in RCR ensures a steady income stream. The built-in annual escalation of 3 to 5 percent on rentals, as incorporated into the contracts, allow for organic growth.”
Longest Land Lease Tenure
To further demonstrate its strong support to the REIT, RLC extended long-term land leases — some as long as 99 years — to RCR, making it the REIT with the longest land lease tenure among Philippine REITs to date. With an average lease span of 89 years across all properties, RCR is poised to enjoy long-term sustainability and predictability.
By excelling in four key areas – market capitalization, portfolio size, geographical coverage, and land lease tenure – RCR appears all set to have a successful stock market debut. According to Go, “It is not surprising, therefore, that with RCR’s pole position in many categories for REIT listings, that it is poised to become the bellwether of office REITs in the Philippines.”
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