AREIT, Inc. (AREIT) embarked on its largest acquisition next year with P23 billion worth of prime commercial properties from its sponsor Ayala Land, Inc. (ALI) alongside the purchase of the P6.77 billion industrial land from Buendia Christiana Holdings Corporation (BCHC), a wholly-owned subsidiary of ACEN Corporation (ACEN).
ALI’s Board of Directors approved its planned 2024 asset infusions into AREIT comprising Makati flagship assets, Ayala Triangle Gardens Tower 2 – ALI’s most premium office tower located at the corner of Paseo de Roxas and Makati Avenue, luxury mall Greenbelt 3 and 5 and Holiday Inn and Suites Makati at Ayala Center, as well as Seda Ayala Center Cebu.
ALI and its subsidiaries Greenhaven Property Ventures, Inc. and Cebu Insular Hotel Co., Inc. will subscribe to 642,149,974 AREIT primary common shares in exchange for the Makati and Cebu properties valued at P21.8 billion at an exchange price of P34.00 per share, as validated by a third-party fairness opinion. The transaction was approved by AREIT shareholders in a Special Stockholders Meeting in February 2024.
In addition to the asset-share swap, AREIT will acquire Seda Lio in El Nido, Palawan, from ALI subsidiary Econorth Resort Ventures, Inc. for P1.19 billion. The acquisition is expected to immediately contribute to AREIT’s income within the first quarter of 2024.
The ALI properties will be acquired with BCHC’s 276-hectare industrial land in Zambales, which will be leased by ACEN’s wholly-owned subsidiary, Giga Ace 8, Inc., for its solar plant operations. It will provide AREIT guaranteed rental income with annual escalations over the next twenty-five years.
AREIT is the first and currently the largest, most diversified Real Estate Investment Trust in the Philippines. The planned infusions by ALI and BCHC will bring AREIT’s Assets under Management (AUM) to P117 billion, its gross leasable building area to more than one million square meters, and its leased industrial land area to 286 hectares by 2024.
The acquisition of prime commercial properties along with industrial land is aligned with AREIT’s objectives to significantly expand and diversify its portfolio to capitalize on various growth opportunities across real estate sectors. Furthermore, the land acquisition will provide AREIT shareholders with the potential for long-term capital appreciation while earning guaranteed lease income on the property.
“We believe in the synergistic goals between ALI as Sponsor and AREIT. ALI has infused a total of P59 billion in assets into AREIT since its IPO in 2020. The inclusion of Ayala Tower Two and Greenbelt 3 and 5 – some of ALI’s prime assets in Makati, is a testament to our continued commitment to AREIT’s long-term growth,” said ALI President and CEO and AREIT Chairman Ms. Anna Ma. Margarita B. Dy.
Ms. Carol T. Mills, AREIT President and CEO, said, “We are laying the groundwork to accelerate AREIT’s expansion. With Ayala Land’s deep pipeline of commercial assets as well as other strategic properties in the Ayala Group, AREIT can have the capacity to grow immensely and attain a market presence at par with some of the REIT players in the region.” Furthermore, she said, “We deliberately planned the acquisitions to have a healthy mix of malls, offices, hotels, and industrial properties, which broadens our portfolio and mitigates concentration risk to a particular sector.”
In the first nine months of 2023, AREIT already posted total revenues of P5.00 billion and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of P3.56 billion, 41% and 39% higher year-on-year, respectively, on account of stable operations and the contribution of the new assets acquired this year and 4Q 2022 through its property-for-share transactions with ALI. Net income registered at P3.43 billion, 42% higher year-on-year, excluding the net fair value change in investment properties. AREIT's properties recorded a 97% occupancy during the period.
Last November 16, 2023, AREIT's Board of Directors declared cash dividends of P0.55 per outstanding common share for the third quarter of 2023, to be distributed on December 15, 2023, to stockholders on record as of December 1, 2023. AREIT's dividend per share has grown by 96% since listing in 2020, driven by stable leasing operations and the accretive property infusions executed annually.
