AREIT shareholders approve P17.3-B swap
Shareholders of AREIT Inc. have approved a P17.33-billion property-for-share swap with sponsor Ayala Land Inc. (ALI) and its subsidiaries, paving the way for six malls and hotels to be added to the real estate investment trust’s portfolio.
On Wednesday, AREIT said it would issue 462.48 million primary common shares at P37.48 each in exchange for the properties.
The shares will come from the company’s unissued capital stock.
The transaction covers four malls—Glorietta 4 and Ayala Malls Circuit in Makati City, Ayala Malls Capitol Central in Bacolod City and Ayala Malls Cloverleaf in Quezon City.
It also includes the 578-room New World Hotel Makati and the 438-room Seda Vertis North in Quezon City.
Fair values
The six properties have a combined gross leasable area of 300,247 square meters. AREIT will acquire ownership of the buildings.
The transaction price represents a premium over AREIT’s 30-day volume-weighted average price of P37.29.
The valuations of the shares and properties were within the range of fair values identified by FTI Consulting and Asian Appraisal.
FTI Consulting used the discounted cashflows approach as its primary valuation method. Other methods were used to cross-check the values of the AREIT shares and properties.
“The properties are expected to contribute further to AREIT’s operating cash flows, boosting dividends per share,” the company said.
The malls will be infused under a direct lease structure, allowing the company to benefit from mall operations and rent escalations.
Master leases
The hotels, meanwhile, will be covered by master leases with fixed and variable components. This will provide stable base rent while allowing AREIT to participate in any upside from hotel operations.
AREIT said the asset-for-share swap would be accretive once the properties are infused. Its existing assets generate a dividend yield of about 6.7 percent based on the 30-day volume-weighted average price.
The company expects to execute the deed of exchange and file the necessary application with the Securities and Exchange Commission (SEC) by October.
SEC approval is targeted by yearend, while electronic certificates authorizing registration from the Bureau of Internal Revenue are expected in 2027.
AREIT plans to apply for the additional listing of the shares with the Philippine Stock Exchange by the first quarter of 2028.
