AREIT, Inc. expects to secure Securities and Exchange Commission (SEC) approval by the end of 2026 for its proposed P17.33-billion property-for-share swap with Ayala Land, Inc. (ALI) and its subsidiaries.
The real estate investment trust said in a disclosure on Tuesday that it plans to execute the deed of exchange and file its application with the SEC for approval of the original share issuance on or before October.
AREIT expects the Bureau of Internal Revenue (BIR) to issue the electronic Certificates Authorizing Registration (eCARs) within 2027.
“The SEC’s approval of the transaction is expected to be issued by the end of 2026,” AREIT said.
“The Company shall likewise apply for the additional listing of shares with the Exchange by Q1 2028,” it added.
Under the proposed transaction, AREIT will issue 462.48 million new common shares at P37.48 each to ALI and four of its subsidiaries in exchange for six properties valued at P17.33 billion.
The properties are Glorietta 4 in Ayala Center Makati, Ayala Malls Capitol Central in Bacolod City, Ayala Malls Circuit in Makati, Ayala Malls Cloverleaf in Quezon City, New World Hotel Makati, and Seda Vertis North.
AREIT said the four malls will be infused under a direct lease structure, allowing the company to benefit from mall operations and rent increases instead of receiving fixed building rent.
“The malls will be infused under a direct lease structure, allowing AREIT to capture the full upside of mall operations and rent escalations rather than a fixed building lease,” the company said.
The two hotels, meanwhile, will be infused under master leases with fixed and variable components, providing AREIT with a base rental floor while allowing it to participate in stronger hotel performance through the variable component.
AREIT said the properties are expected to contribute to operating cash flows and boost dividends per share.
“The asset-for-share swap will be accretive after the new assets are infused,” it said.
AREIT said its dividend yield from existing assets is about 6.7%, based on the 30-day volume-weighted average price of P37.29.
The P37.48 issue price of the new shares is at a premium to the 30-day volume-weighted average price.
The company said the valuations of the shares and properties fall within the range of fair values identified by FTI Consulting and in appraisal reports issued by Asian Appraisal.
FTI Consulting used the discounted cash flow approach as its primary valuation method, while the comparable public companies, volume-weighted average price, and direct capitalization methods were used as cross-checks.
The transaction is subject to SEC approval of the exemption from registration for the share issuance and the transaction valuation.
AREIT said the property-for-share swap will qualify as a tax-free exchange under Section 40(C)(2) of the Tax Code.
AREIT shareholders are scheduled to vote on the proposed transaction at a special stockholders’ meeting on Sept. 23.
ALI is AREIT’s sponsor and directly and indirectly owns 59.03% of the real estate investment trust.
The other transferors are Capitol Central Commercial Ventures Corp., Bay City Commercial Ventures Corp., Makati Cornerstone Leasing Corp., and North Triangle Hotel Ventures, Inc.
The proposed asset infusion was first disclosed earlier this month as part of a broader P20-billion expansion that also includes AREIT’s planned P2.62-billion cash acquisition of Fairmont Raffles Hotel Makati from an ALI subsidiary.
The additional assets were earlier estimated to bring AREIT’s total gross leasable area to about five million square meters (sq.m.) and assets under management to P179 billion.
Following the proposed transactions, offices are expected to account for 53% of AREIT’s assets under management, followed by retail at 33%, hotels at 9%, and land at 5%.
On Tuesday, AREIT shares rose by 1.2% or 45 centavos to P38, while Ayala Land gained 2.9% or 44 centavos to P15.62. — Alexandria Grace C. Magno
