Infrastructure REIT Offerings: New Opportunities Emerge

Investment and Capital Corp. of the Philippines (ICCP) is preparing for possible real estate investment trust (REIT) offerings from four infrastructure companies as regulators open the asset class to include infrastructure. “We are talking to infrastructure companies that could be eligible under the SEC’s new infrastructure-themed rules,” said Jesus Mariano Ocampo, ICCP president and chief operating officer. Ocampo said the new rules for REITs are now geared toward infrastructure assets, such as tollways, fiber optic networks, cellular towers, and data centers. He noted that it is easier to convince companies to take the REIT route compared to a regular initial public offering, or IPO, because investors in REITs are focused primarily on dividend yields. The Securities and Exchange Commission earlier this month issued revised rules to allow a wider range of income-generating assets, including toll roads and airports, to qualify for public offerings. The new framework expands the definition of income-generating real estate to include properties with recurring and predictable cash inflows. Beyond traditional leases, REITs can now include assets that generate passive income from toll fees, user fees, ticket sales, parking fees, and storage fees. The SEC said the move will deepen the capital market and provide more wealth-creation opportunities for Filipinos. In preparation for possible listings, infrastructure companies will begin creating special purpose vehicles to hold their income-generating assets. Because this process takes time, Ocampo expects infrastructure-themed REIT offerings to occur in the second half of the year. Since the implementation of REIT rules in 2009, most listings have involved the country’s largest real estate companies, including AREIT Inc. of Ayala Land Inc., MREIT Inc. of Megaworld Corp., and RL Commercial REIT of Robinsons Land Corp.