The shareholders of AREIT [AREIT 43.85 0.46%] [link] , the subsidiary REIT of Ayala Land [ALI 34.80 0.57%], approved the property-for-shares swap that will see ALI inject six Cebu-based office buildings into AREIT, with an aggregate value of P11.3 billion, in exchange for a little over 252 million common shares of AREIT.
The AREIT shares were valued at P44.65 for this transaction, which is actually at a 2% premium to AREIT’s Friday close of P43.85/share. The press release notes that once the injection is complete, AREIT’s gross leasable area (GLA) will increase to 637k sqm, and its assets under management will increase to P64 billion.
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Doctor Strange would probably have a hard time finding an alternate universe where AREIT shareholders vote this move down, but I bring it up because the stock price of AREIT was P51.00/share back when this deal was announced in March, and the price of the stock has fallen so much that the shares in the deal are actually more expensive than what is currently available on the market.
That’s a technicality, of course, since the 252 million AREIT shares that ALI will get in this deal is approximately 800 times the average daily transacted volume of AREIT shares on the market. If ALI attempted to buy up all 252 million shares, not only would it take literally years to do, but the price per share would be considerably higher than the P44.65/share price it got in this deal.
I mean, all of that is beside the point anyway, since AREIT wouldn’t be able to pay for ALI’s buildings by just allowing ALI to buy its shares on the open market, that’s crazy. Anyway, once the deal completes, AREIT will (temporarily) be the largest commercial REIT in the Philippines by GLA (unless one of the other REITs completes its deal sooner).
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