SEC approves P15.46 B AREIT, ALI asset-for-equity swap

Published October 11, 2021, 3:09 PM

by James A. Loyola

The Securities and Exchange Commission has approved the P15.46 billion shares-for-asset swap between AREIT Inc. (AREIT), the pioneer real estate investment trust (REIT) in the Philippines, and its sponsor company Ayala Land Inc.

In a disclosure to the Philippine Stock Exchange, AREIT said the SEC has approved the subscription of Ayala Land, Inc (ALI) and its subsidiaries, Westview Commercial Ventures Corp. and Glensworth Development, Inc., to 483.25 million AREIT shares in exchange for its identified properties.

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In line with this, the parties have executed an Amendment to Section 4.2 of the Deed of Exchange on Oct. 7, 2021 so that the recognition of income from the new assets will accrue to AREIT beginning Oct 1,, 2021, instead of Nov. 1, 2021.

“This will enable shareholders to partake in the contribution of the new assets starting in the fourth quarter of the year,” AREIT said.

In anticipation of the approval, AREIT declared its third quarter dividends last Sept. 22, 2021 (P0.44 per share to stockholders of record as of Oct. 6, 2021), earlier than its regular quarterly dividend declaration to provide shareholders with an equitable share in the Company’s performance for the whole third quarter, prior to the increase in its common shares in exchange for the new assets.

The new assets are expected to contribute significantly to earnings in the succeeding periods, thereby increasing the potential dividend per share for AREIT shareholders.

Last Mar. 16, 2021, the Company’s Board of Directors approved the increase of AREIT’s authorized capital stock from P11.74 billion to P29.5 billion and the subscription of ALI and its subsidiaries to 483.25 million primary common shares of AREIT in exchange for identified commercial properties valued at P15.46 billion.

AREIT’s outstanding common shares will increase to 1.51 billion from 1.03 billion wherein ALI will own approximately 66 percent of the total shares while adhering to the prescribed minimum public ownership requirements under Philippine laws.

The Company will apply for the issuance of the Certificate Authorizing Registration for the new assets from the Bureau of Internal Revenue and the listing of the shares in favor of ALI and the subsidiaries within the year.

With the completion of the transaction, AREIT’s gross leasable area (GLA) is at 549 thousand sq. meters. At the closing price of P39.80 on Oct. 8, 2021, the Company’s total market capitalization is P60 billon from P27 billion during its IPO last year.

 
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