The Securities and Exchange Commission (SEC) has approved the P11.26 billion assets-for-equity swap between AREIT Inc. (AREIT), the Philippines’ pioneer real estate investment trust, and its sponsor Ayala Land, Inc. (ALI).
In a disclosure to the Philippine Stock Exchange, AREIT said ALI will subscribe to 252.14 million AREIT shares in exchange for identified ALI-owned Cebu commercial properties valued at P11.26 billion.
In anticipation of the approval, AREIT declared its third quarter 2022 dividends last Oct. 11 (P0.49/share, to stockholders of record as of 25 Oct. 25, 2022), earlier than its regular quarterly dividend declaration.
The new assets are expected to contribute to earnings of the company in the succeeding periods.
In line with this, the parties have executed an Amendment to Section 4.3 of the Deed of Exchange effecting the recognition of income from the new assets by AREIT for the fourth quarter of 2022.
AREIT will apply for the Bureau of Internal Revenue Certificate Authorizing Registration for the new assets and listing the shares in favor of ALI within the first quarter of 2023.
Upon approval, AREIT’s outstanding common shares will increase to 1.76 billion from 1.51 billion with ALI owning approximately 66 percent of the total shares of AREIT while adhering to the prescribed minimum public ownership requirements under Philippine laws.
With the completion of the transaction, AREIT’s gross leasable area (GLA) has expanded to 673 thousand sq. meters.
At the closing price of P35.70 on Jan. 17, 2023, AREIT’s total market capitalization has reached P63 billion from P27 billion during its initial public in 2020.
AREIT is planning to diversify into shopping malls as part of its target to acquire assets worth a total of P30 billion to P45 billion over the next three years.
The firm said it plans to continue to grow its portfolio of assets at an average of 100,000 square meters of gross leasable area (GLA) every year from 2023 to 2025.
AREIT said this will increase its assets under management at approximately P10 billion to P15 billion annually.
In 2020, AREIT set a growth target to double its Assets Under Management (AUM) from P30 billion to P60 billion two years from its initial public offering.
To date, the company has P53 billion in AUM and post infusion of the Cebu assets via property for shares swap, it had projected to reach P64 billion upon approval of the asset for shares swap by the SEC.
Aside from expanding its GLA, AREIT also plans to grow and diversify its asset portfolio in terms of sector, location and income contribution, funded through leverage and equity.