MANILA, April 14 (Reuters) – Ayala Land Inc (ALI.PS) plans to list a $300 million real estate investment trust (REIT) in the second half of 2010, and the top Philippine property firm said on Wednesday that residential sales would drive its earnings growth.
Ayala Land, a unit of conglomerate Ayala Corp (AC.PS), is also considering a peso bond offer to raise less than 5 billion pesos ($110 million), which would partly fund record capital spending of 27.17 billion pesos this year.
“Based on the initial advice from our financial adviser… it appears that a size of $300 million is probably appropriate for a company like Ayala Land as the IPO size,” Jaime Ysmael, chief finance officer at Ayala Land, told a media briefing.
There are no REITs in the Philippines at present, as the law allowing them has only recently been passed. Mall operator SM Prime Holdings Corp (SMPH.PS) has said it plans to raise $300 million through a REIT this year. [ID:nSGE61208J]
Ayala Land has hired JP Morgan (JPM.N) as adviser for the REIT listing, which Ysmael said might be done towards the end of the third quarter or in the fourth quarter.
Equity-based REITs have grown significantly, particularly in mature markets like Singapore and Hong Kong, said Ysmael, adding he expected a bright outlook for REITs in the Philippines.
“We feel that the appetite for a Philippine REIT will be there not only from foreign investors, but even domestically.
Ysmael said office and retail property assets would most likely be in the REIT, with proceeds to be used to expand its leasing business.
Ayala Land told Reuters last month it expects contracted sales to double this year to about 40 billion pesos on strong demand for its luxury and middle-market residential projects. [ID:nTOE62O085]
The company, which is also expanding its hotel portfolio, said on Wednesday it expected first-quarter net income to be higher than both the first quarter and fourth quarter of 2009.
“I think we will continue to see quarter-on-quarter growth, company president Antonino Aquino said.
“We have seen how our quarterly earnings have been improving over the last four quarters.” Ayala Land reported a net profit of about 910 million pesos in January-March 2009, down 50 percent from the previous year. For 2009, net profit dropped 16 percent to 4.04 billion pesos.
Ayala Land, which competes with Megaworld Corp (MEG.PS), Filinvest Land (FLI.PS) and Robinsons Land Corp (RLC.PS), gets most of its revenues from the residential market, with the rest coming mainly from shopping centres and rental income from office towers.
Shares of Ayala Land fell 3.6 percent on Wednesday, underperforming a flat main market .PSI. (Editing by John Mair)