RLC REIT to Have Widest Geographical Reach of Properties

RL Commercial REIT Inc. (RCR) has pegged its final initial public offering (IPO) price at P6.45/share, making it the Philippines’ largest REIT company with a market capitalization of P64.2 billion, as reported by Inquirer.

RCR is receiving support from its sponsor, Robinsons Land Corporation (RLC). The firm is set to raise a total of P23.51 billion from its initial offering of 3.34 billion common shares and an over-allotment option of 305 million shares.

The proposed offer period is between August 25 to September 3, 2021, and will tentatively list on the main board of The Philippine Stock Exchange (PSE), Inc. on September 14, 2021. 

RCR’s initial portfolio consists of 14 buildings registered with the Philippine Economic Zone Authority and spans a total gross leasable area of 425,315 square meters. Their developments are spread across numerous central business districts in the country, such as Taguig, Pasig, Quezon City, Cebu, and Davao. It has the widest geographical reach among all the current local REITs.

As per Santos Knight Frank’s valuation, the firm’s total appraised value is set at P73.9 billion as of June 30, 2021. RCR is the fourth REIT to conduct an IPO on the PSE, following the listing of DDMP REIT Inc., AREIT Inc., and the recently-listed Filinvest REIT Corp.

REIT to buoy local real estate market 

REITs are stock corporations established by companies to own income-generating real estate assets such as office buildings, hospitals, shopping malls, apartment buildings, infrastructure projects, hotels, and more. 

It’s a type of investment method that gives back a return on investment obtained from the rental income of these real estate assets. These companies can invest a portion of their proceeds to property development projects, which can spur economic activity.

RCR set its final offer price almost 12% lower than the P7.31 price it initially pegged during its preliminary prospectus. 

Michael L. Ricafort, Rizal Commercial Banking Corp. chief economist, told BusinessWorld that the pricing may have something to do with the current market conditions and the surge in cases of the Delta variant of the coronavirus disease.

But Darren Blaine T. Pangan, Timson Securities, Inc. trader, says that the lower IPO may still benefit the firm by enticing more investors to subscribe to their IPO, since they can look forward to more attractive yields because of these figures.

RCR is expecting to raise up to P23.53 billion in proceeds when it offers 3,342,864,000 common shares with an over-allotment option of 305,103,000 common shares. The proceeds will then be reinvested into the country.

Jericho P. Go, RCR president and chief executive officer, told the news outlet that the firm intends to contribute to nation-building by developing more projects which will create jobs and spur economic recovery.

As reported by SunStar, many professionals believe that REITs will help stimulate the country’s economic recovery after suffering from setbacks brought on by the pandemic.

RLC’s extensive portfolio and impressive market performance

There are 14 PEZA-accredited properties under RCR. Among the properties included are Robinsons Summit Center in Makati City, Exxa-Zeta Towers in Quezon City, Robinsons Cybergate Center 2 & 3 in Mandaluyong City, and Robinsons Cyberscape Alpha and Robinsons Cyberscape Beta in Pasig City.

There are also several business process outsourcing (BPO) structures located in RLC’s commercial centers and 150,000 sqm worth of properties in various stages of construction included in the offering.

The company posted a net income growth of 236 percent quarter-on-quarter in the first half of 2021, amounting to P2.9 billion. Their consolidated revenues amounted to P16.67 billion in the same period, as detailed in an article by Manila Bulletin.

RCR’s development subsidiary represented P12.58 billion of the net income growth, boasting a 91 percent year-on-year growth. The firm’s residential arm experienced a P2.82 billion growth in net sales in the first quarter. These figures make up 72 percent of pre-COVID performance, which is more than double its performance in the latter half of 2020.

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Source: Inquirer, BusinessWorld, SunStar, Manila Bulletin

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