Property developer Ayala Land Inc. is injecting its flagship office developments and shopping malls into real estate investment trust company AREIT Inc. via a P22.5-billion property-for-share swap deal.
The transaction will make AREIT one of the largest and the most diversified commercial REITs in the Philippines.
ALI said in a disclosure to the stock exchange Tuesday its executive committee approved the deal where the company and subsidiaries AyalaLand Malls Inc. and Northbeacon Commercial Corp. would subscribe to 607.559 million primary common shares of AREIT Inc.
AREIT, in exchange, will acquire ALI assets that include shopping malls Glorietta 1 and 2 mall wings and MarQuee mall in Angeles, Pampanga as well as office developments One Ayala Avenue East and West BPO Towers at the corner of Ayala Ave. and EDSA and BPO buildings at Ayala Center.
These assets have a total value of P22.5 billion as validated by a third-party fairness opinion, the two companies said.
The properties have a combined gross leasable area of 190,000 square meters with an overall occupancy rate of 99 percent and a weighted average lease expiry of 14.5 years.
“The rebound of commercial businesses is an opportunity for AREIT to widely diversify its assets with more retail buildings. The infusion of Glorietta 1 and 2 mall and BPO buildings as well as the brand new One Ayala Avenue BPO towers is testament to AREIT as Ayala Land’s flagship REIT,” said AREIT president and chief executive Carol Mills.
AREIT has more than doubled its portfolio to 673,000 sq. m. equivalent to P64 billion assets under management from 153,000 sq. m. equivalent to P30 billion AUM at the time of its initial public offering in 2020. This resulted in a 52-percent total shareholder return.
It said that with the new infusion, AREIT would nearly triple the company’s AUM to P87 billion and boost its GLA more than five-fold to 863,000 sq. m. from the IPO.
“As we did in the last two years, we are committed to continually grow and diversify our assets to increase shareholder value for AREIT, while ALI maximizes capital recycling and reinvests further in Philippine real estate,” Mills said.
The proposed property-for-share swap is subject to approval of AREIT shareholders at their annual meeting slated next month and pertinent regulatory bodies.
