Real estate giant Ayala Land, Inc. has raised P2.78 billion from the sale of 75 million common shares of AREIT, Inc. at a transaction price of P37.00 per share.

In a disclosure to the Philippine Stock Exchange, ALI said the shares, equivalent to about 2.33 percent of AREIT, were sold under a placement agreement with BPI Capital Corporation and UBS AG Singapore Branch.

The transaction was upsized from the target 50 million shares on the back of strong participation from local long only and international investors, and was multiple times oversubscribed. 

The AREIT shares were offered and sold within the United States to qualified institutional buyers as well as in the Philippines in transactions that do not require registration under the Philippine Securities Regulation Code.

The proceeds from the block sale shall be settled on December 12, 2024, subject to the terms and conditions of the Placement Agreement. ALI and AREIT will submit the required Reinvestment Plan detailing the use of proceeds obtained from the block sale in due course.

This follows ALI's sale of 75 million shares in the same price range (at P36.20) last September.

"As we said at the time, the sale may be in preparation for another asset infusion next year, which also applies to this reported new transaction, as the current free float of AREIT is already much higher than the minimum required for REITs," noted Abacus Securities Corporation.

ALI needs to sell AREIT shares to increase the public float before an asset infusion. This is because the assets will be swapped with new AREIT shares, which will reduce the public float by increasing ALI's ownership in the company. The REIT Law mandates a minimum public ownership requirement for REITs.

Abacus said, "with this news, there is a chance that (AREIT’s share) price may drop close to the low-end of this range, and if it does, it would be an opportunity to buy aggressively.”

Abacus also noted, "even if the price drops to P36.50 and stays there for the rest of the month, our estimates show that AREIT would still outrank the next index member in terms of market capitalization (LTG) and AREIT's probability of being added to the index by February remains intact."

AREIT reported a 46 percent jump in net income to P5 billion, excluding the net fair value change in investment properties, for the first nine months of 2024.

The firm posted total revenues of P7.1 billion and earnings before interest, taxes, depreciation, and amortization (EBITDA) of P5.1 billion, 42 percent and 45 percent higher year-on-year, respectively.

On Sept. 26, 2024, AREIT obtained the Securities and Exchange Commission's (SEC) approval for its property-for-share swap with ALI and its subsidiaries, Greenhaven Property Ventures Inc. and Cebu Insular Hotel Co. Inc.

This involves the Ayala Triangle Gardens Tower 2 office building; Greenbelt 3 & 5 malll; Holiday Inn Hotel & Suites Makati; and Seda Hotel in Ayala Center Cebu

These properties are valued at P21.8 billion for 642.15 million AREIT shares.

The SEC approval also included a 276-hectare industrial land parcel in Zambales, owned by Buendia Christiana Holdings Corp., a wholly-owned subsidiary of ACEN Corporation. This is valued at P6.8 billion for 199.11 million AREIT shares.

The recognition of these assets accrued beginning July 1, 2024.