RLC REIT prices IPO at P6.45/share

Published August 23, 2021, 4:25 PM

by James A. Loyola

The Gokongwei Group’s RL Commercial REIT Inc. (RCR) has set its final initial public offering price at P6.45 per share, making it the country’s largest real estate investment trust with a market capitalization of P64.2 billion.

The firm is raising up to a total of P23.51 billion from its maiden offering consisting of 3.34 billion common shares with an over-allotment option of up to 305 million shares.

Based on the latest timetable indicated in the preliminary REIT Plan uploaded at the Company’s

website, RCR’s proposed offer period will run from August 25 to September 3, 2021, and its tentative listing date on The Philippine Stock Exchange, Inc. will be on September 14, 2021.

RLC’s Bridgetowne

RCR is backed by its sponsor, Robinsons Land Corporation (RLC), one of the leading real estate and property developers in the country with a track record of 41 years in the industry.

“The large offer size and market capitalization will put RCR on the radar of foreign funds and

large local institutional investors. The attractive high liquidity and large market capitalization is desired by the large global funds,” said RCR President and CEO Jericho Go in an interview.

He noted that, aside from having the biggest market capitalization, RCR is also leading other domestic REITs in terms of portfolio size, geographical coverage, and land lease tenure.

Based on its prospectus, RCR will have the biggest portfolio consisting of 14 high quality commercial properties with a total Gross Leasable Area of approximately 425,000 square meters.

“The bigger the size, the greater the opportunity to generate income and improve yield,” said Go noting that a REIT is an income-generating instrument that is mandated to distribute at least 90 percent of its earnings as cash dividend to shareholders.

RCR will also have the widest geographical coverage as its leasing assets are located in 9 cities covering Luzon, Visayas, and Mindanao.

Go said 94 percent of RCR’s portfolio is in Metro Manila and 6 percent in high growth areas of provinces of Tarlac, Naga, Cebu, and Davao. Its Metro Manila assets are in the three major Central Business Districts of Makati, Ortigas and FortBonifacio as well as in the major cities of Quezon and Mandaluyong.

“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, only portions of the REIT will be affected,” he noted.

RCR also boasts of having the longest land lease tenure with an average of 89 years across all properties. The firm offers the longest land lease tenure of up to 99 years for most properties.

“A long-term land lease ensures that the operation of the REIT will continue for a very long time. This gives investors the assurance that RCR’s business has sustainability and predictability,” said Go.

Aside from these, Go said RCR has an excellent expansion pipeline as it enjoys the full support and backing of RLC which gives it access to about 422,000 square meters of gross leasable area for acquisition.

“This consists of completed buildings, BPO spaces located inside malls and projects that are currently under various stages of construction. This addresses the inorganic growth for the company,” he noted.

Go added that, “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.”

“It is not surprising therefore that with RCR’s pole position in many categories for REIT listings that it will soon become the bellwether of office REITs in the Philippines,” he concluded.