Ayala Land to infuse ‘crown jewel’ malls, offices into AREIT via P22.5-B swap
MANILA, Philippines – Property giant Ayala Land Inc. (ALI) is preparing to transfer P22.5 billion worth of prized malls and offices into AREIT Inc., marking the largest ever asset injection since the pioneering real estate investment trust (REIT) company went public three years ago.
The deal will include Ayala Land’s “crown jewel” shopping malls such as the Glorietta 1 and 2 in the Ayala Center complex in Makati City, which will give AREIT investors exposure to the resurgent retail segment during the postpandemic era.
Apart from malls, Ayala Land will also infuse business process outsourcing (BPO) buildings in Ayala Center, a commercial hub in the country’s financial district that was opened in the early 1990s and redeveloped in 2012.
It will also inject One Ayala Avenue East and West BPO Towers at the corner of Ayala Avenue, Makati and Edsa, and the MarQuee mall in Angeles, Pampanga.
The assets have a combined gross leasable area of 190,000 square meters (sqm)—nearly double the company’s commitment to grow leasable assets by an average of 100,000 sqm per year until 2025.
“The rebound of commercial businesses is an opportunity for AREIT to widely diversify its assets with more retail buildings,” AREIT president and CEO Carol T. Mills said in a stock exchange filing.
“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,” Mills added.
Ayala Land and AREIT are expecting to complete the transaction, to be executed via a property-for-share swap, within 2023.
Ayala Land will infuse the assets in exchange for 607.56 million primary common shares of AREIT, which were valued at P37 each.
“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 deal was approved last March 7 and is expected to be ratified by shareholders during AREIT’s annual stockholders’ meeting on April 26 this year.
AREIT said it has exceeded growth plans since listing in 2020, when it started with 153,000 sqm of leasable assets valued at P30 billion.
The planned infusions this year will triple asset value to P87 billion and bring its leasable space to 863,000 sqm.
AREIT earlier said net income in 2022 rose 20.8 percent to P2.9 billion while revenues expanded by 53 percent to P5.1 billion. It ended the year with a 98 percent occupancy rate.
Last month, AREIT’s board of directors approved cash dividends of P0.52 per share for the fourth quarter of 2022. The dividends will be paid on March 24, 2023 to stockholders on record as of March 10 this year. AREIT’s dividend per share increased by 6 percent to P0.52 in the fourth quarter from P0.49 in the previous quarter.