AREIT Inc. (AREIT), the real estate investment trust of Ayala Land Inc. (ALI), is expanding to the hospitality business as part of its largest acquisition next year of P29.77 billion worth of prime commercial properties.

In a disclosure to the Philippine Stock Exchange (PSE), AREIT is purchasing P6.77 billion industrial land from Buendia Christiana Holdings Corporation (BCHC), a wholly-owned subsidiary of ACEN Corporation (ACEN), which increased its assets acquisition to P29.77 billion.
 

ALI also disclosed that its Board of Directors has approved its planned 2024 asset infusions into AREIT comprising Makati flagship assets.

These will consist of Ayala Triangle Gardens Tower 2 – ALI’s most premium office tower located at the corner of Paseo de Roxas and Makati Avenue, luxury mall Greenbelt 3 and 5 and Holiday Inn and Suites Makati at Ayala Center, as well as Seda Ayala Center Cebu. 

Meanwhile, ALI and its subsidiaries Greenhaven Property Ventures Inc. and Cebu Insular Hotel Co. Inc. will subscribe to 642.15 million AREIT primary common shares in exchange for the Makati and Cebu properties valued at P21.8 billion at an exchange price of P34 per share, as validated by a third-party fairness opinion. 

“We believe in the synergistic goals between ALI as Sponsor and AREIT. ALI has infused a total of P59 billion in assets into AREIT since its IPO in 2020,” said ALI President and CEO and AREIT Chairman Anna Ma. Margarita B. Dy. 

She noted that, “the inclusion of Ayala Tower Two and Greenbelt 3 and 5 – some of ALI’s prime assets in Makati, is a testament to our continued commitment to AREIT’s long-term growth.”

AREIT President and CEO Carol T. Mills said, “we are laying the groundwork to accelerate AREIT’s expansion. With Ayala Land’s deep pipeline of commercial assets as well as other strategic properties in the Ayala Group, AREIT can have the capacity to grow immensely and attain a market presence at par with some of the REIT players in the region.” 

“We deliberately planned the acquisitions to have a healthy mix of malls, offices, hotels, and industrial properties, which broadens our portfolio and mitigates concentration risk to a particular sector,” she added.

The transaction will be subject to the approval of AREIT shareholders in their Special Stockholders Meeting in February 2024 and pertinent regulatory bodies thereafter. 

In addition to the asset-share swap, AREIT will acquire Seda Lio in El Nido, Palawan, from ALI subsidiary Econorth Resort Ventures Inc. for P1.19 billion. The acquisition is expected to immediately contribute to AREIT’s income within the first quarter of 2024.

The ALI properties will be acquired with BCHC’s 276-hectare industrial land in Zambales, which will be leased by ACEN’s wholly-owned subsidiary, Giga Ace 8, Inc., for its solar plant operations. It will provide AREIT guaranteed rental income with annual escalations over the next twenty-five years. 

AREIT is the first and currently the largest, most diversified Real Estate Investment Trust in the Philippines. 

The planned infusions by ALI and BCHC will bring AREIT’s assets under management (AUM) to P117 billion, its gross leasable building area to more than one million square meters, and its leased industrial land area to 286 hectares by 2024.  

The acquisition of prime commercial properties along with industrial land is aligned with AREIT’s objectives to significantly expand and diversify its portfolio to capitalize on various growth opportunities across real estate sectors. 

Furthermore, the land acquisition will provide AREIT shareholders with the potential for long-term capital appreciation while earning guaranteed lease income on the property.

AREIT will execute the Deed of Exchange with ALI, its subsidiaries, and BCHC and apply for its approval with the SEC by March 2024. The new shares will be issued, and the income from the assets shall accrue to AREIT upon approval. 

As in previous asset infusions, AREIT will remain compliant with the minimum public float requirement as the sponsor will effect a block placement of its shares on or before the expected SEC approval within the second quarter of next year.

Last Nov. 16, 2023, AREIT's Board of Directors declared cash dividends of P0.55 per outstanding common share for the third quarter of 2023, to be distributed on Dec. 15, 2023, to stockholders on record as of Dec. 1, 2023.  

AREIT's dividend per share has grown by 96 percent since listing in 2020, driven by stable leasing operations and the accretive property infusions executed annually.