AREIT sees asset boost after SEC clears P11.2-B swap with Ayala Land

Real estate investment trust (REIT) pioneer AREIT Inc. of the Ayala Group is taking over six office buildings in Cebu, boosting its overall asset portfolio by 20 percent to P64 billion.

In a stock exchange filing on Wednesday, AREIT said it would acquire the office buildings after the Securities and Exchange Commission approved an P11.23-billion asset swap deal with its sponsor and controlling shareholder, Ayala Land Inc.

The deal will increase AREIT’s leasable assets by 22.6 percent to 673,000 square meters. In turn, Ayala Land will gain 252.14 million AREIT shares at a price of P44.65 per share.

“As the first Philippine REIT which successfully listed amidst the pandemic, AREIT aspires to further grow its leasing portfolio with prime and stable assets,” the company said in a stock exchange filing on Wednesday.

“The swap will be accretive and will potentially increase the overall yield to 5 percent after the new assets are infused,” it added.

AREIT earlier declared dividends in the third quarter of 2022 amounting to P0.49 per share.

“The new assets are expected to contribute to earnings of the company in the succeeding periods,” it said.

The six projects, all located within the Cebu IT Park in Cebu City, are eBloc 1, eBloc 2, eBloc 3, eBloc 4, ACC Tower, and Tech Tower 1. The combined projects have an average occupancy rate of about 96 percent.

“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,” AREIT said.

After the transaction, Ayala Land will own 66 percent of AREIT.

The REIT company earlier told the stock exchange it planned to expand leasable assets by about 100,000 sqm per year from 2023 through 2025. This would also increase assets under management by about P10-P15 billion annually.

Over the three-year period, it will increase shareholders’ returns by 10-12 percent via “organic growth” and new acquisitions.

“Targeted total shareholder return of at least 10 percent will be achieved from 3 percent to 5 percent rental escalations from operating assets and additional dividends generated from new assets to be acquired from 2023 to 2025,” the company stated its three-year investment roadmap.

AREIT earlier said core profit from January to September last year jumped 65 percent to P2.4 billion while revenues climbed 68 percent to P3.6 billion.