Real Estate investment trusts (REITs) have been popular among most of the larger developers in the Philippines. Ayala Land has already launched one. Meanwhile, Filinvest Land, Robinsons Land and Megaworld are all gearing up to follow suit. But the largest industrial REIT in the Philippines will see a delicious partnership form that could only be rivaled by a helping of spaghetti served with fried chicken.
Jollibee announced that it will team up with DoubleDragon to form what will be the first and largest industrial REIT in the Philippines. According to a report from PhilStar, the fast food giant will place 6.4 hectares of industrial properties currently being used as commissaries into CentralHub Industrial Centers, the developer’s industrial leasing subsidiary.
The Jolibee properties would expand the company’s industrial portfolio to 39.8 hectares making it viable for a REIT launched. Fund raised from the initial public offering (IPO) would allow the eatery to buy land for new stores and commissaries which would then be placed into the same REIT.
“JFC’s plan is to reduce assets tied to real estate properties by converting some of them into securities in REIT and by selling others directly to third parties,” Jollibee Chairman Tony Tan Caktiong was quoted by the newspaper as saying. “Basically, the REIT will help continuously finance our future expansion while the REIT will keep growing in the years ahead allowing more public investors to buy more REIT shares. This is a more cost-effective way of financing versus owning or pure leasing of properties due to the cash dividends JFC will receive from the REIT.”
The investment of funds generated from IPOs back into the Philippine property market was one reason why real estate experts wanted to see REITs implemented in the country.
“We anticipate that REITs will drive an increase in acquisition, consolidation, and property development activities across the Philippines in the coming years. New capital raised by the developers through REITs will enable expansion of the real estate sector not only in Metro Manila but also in the provinces, and with it generate jobs across many sectors,” Kash Salvador, Associate Director for Investment & Capital Markets, Santos Knight Frank, noted.