AREIT, Inc. (AREIT) identified the ten properties included in its P15 billion-property-for-share swap transaction with its sponsor, Ayala Land, Inc. (ALI) in a disclosure to the Philippine Stock Exchange (PSE) on Wednesday. It announced that a total of 205 thousand sq. meters of leasable space, primarily composed of office leasing properties located within Ayala Land’s prime estates in the country, will form part of its roster of REIT assets.
These are Vertis North Commercial Development which has three office buildings and a retail podium located in Quezon City; One and Two Evotech in Nuvali Santa Rosa, Laguna; Bacolod Capitol Corporate Center and Ayala Northpoint Technohub, both located in Negros Occidental; and office condominium units at BPI-Philam Life buildings in Makati CBD and Madrigal Business Park in Alabang.
The largest of these properties is Vertis North commercial development with 125,000 sq. meters of leasable space and a retail podium of 39,000 sq. meters. The three office buildings are 97 percent occupied and are leased to large BPO locators including Google Services Philippines, Teleperformance, Telus and Global Payments. The retail component is operated by a wholly-owned subsidiary of ALI under the Ayala Malls brand and will pay a monthly guaranteed building lease to AREIT for a period of 36 years, ensuring stable income to AREIT. Vertis North commercial development is LEED certified.
Following Vertis North Commercial Development are the Evotech buildings in Nuvali with a total of 23,000 sq. meters of leasable space. The buildings are 100 percent occupied and leased to Concentrix CVG Philippines and IBM Business Services. One Evotech is LEED silver certified.
The other properties are Bacolod Capitol Corporate Center with 11,000 sq. meters and Ayala Northpoint Technohub with 5,000 sq. meters both of which are 100% occupied by ARB call facilities and Iqor, respectively. All said buildings are PEZA accredited. Furthermore, the office condominium units in the BPI-Philam Life buildings in Makati and in Alabang have a total of 1,500 sq. meters, 100 percent occupied and leased to Oberthur Card Systems in Makati and Amaia Land, an Ayala Land subsidiary headquartered in Alabang.
The property-for-share swap transaction with ALI is subject to the approval of its shareholders on their first annual meeting on April 23, 2021, as well as pertinent regulatory bodies. Last March 23, AREIT announced that its Board of Directors approved the increase of AREIT’s authorized capital stock from Php11,740,000,000.00 to Php 29,500,000,000.00 and the subscription of Ayala Land, Inc. (ALI) of 483,254,375 primary common shares of AREIT in exchange for the identified ALI commercial properties valued at P15,464,140,000.00, to be undertaken at a price of P32.00 per share as validated by a third-party fairness opinion. If the transaction is approved, AREIT’s outstanding common shares will increase to 1,508,910,810 from 1,025,656,435 wherein ALI will own approximately 66% of the total shares demonstrating its strong support as the sponsor of AREIT while adhering to the prescribed minimum public ownership requirements under Philippine laws.
AREIT’s deposited property value will increase from P37 billion to P52 billion and its leasing portfolio will expand further from 344 to 549 thousand sq. meters. The properties are expected to contribute further to its operating cash flows, boosting dividends per share. At an exchange price of P32.00 per share, the properties will generate a projected yield of 6 percent. At the aforementioned exchange price, AREIT’s yield from its existing assets is approximately 5.4 percent. Hence, the asset for share swap would be accretive and will increase the overall yield from 5.4 percent to 5.7 percent after the new assets are in place.
Further details on the transaction and the properties will be provided in the comprehensive corporate disclosure on issuance of shares submitted to the PSE and the company’s 2021 Definitive Information Statement which shall be made available to shareholders on or before March 31.
“This transaction demonstrates the priority of a well-designed REIT which is to generate compelling yields for its shareholders. At the same time, it allows AREIT to grow its assets significantly and increase shareholder value,” AREIT President and CEO Carol T. Mills said.
AREIT, the first Philippine REIT was included as one of the index stocks of the FTSE MICRO-CAP Index last March 19.
