Ayala Land cuts AREIT stake to calm dilution worries

MANILA, Philippines  —Ayala Land Inc. is shaving off a chunk of its stake in AREIT Inc. to ensure the real estate investment trust (REIT) arm remains compliant with public ownership requirements ahead of the group’s largest infusion malls and industrial land worth over P28 billion.

Ayala Land and subsidiaries raised P5.63 billion from the sale of 181 million AREIT shares at a discounted price of P31.10 each.

This caused AREIT’s shares to drop 4.48 percent to P32 per share on Friday.

AREIT will pay for the assets by issuing shares to Ayala Land and ACEN Corp. But the large size of the issuance is projected to cause AREIT to fall below the minimum 33 percent public ownership level required of REITs and could trigger a trading suspension.

READ: Dilution fears nag AREIT’s P30-B share-for-asset swap

COL Financial Group chief equity strategist April Lynn Tan said on Friday the group will need to sell more AREIT shares to avoid a trading suspension after the asset infusions are completed.

“AREIT shareholders will need to sell around 260 million shares of AREIT to comply with the free float requirement for the said acquisitions,” she told the Inquirer on Friday.

The sale by Ayala Land on Friday “will just be the first tranche and we should expect more this year.”

Based on COL Financial’s calculations, AREIT’s major shareholder will need to sell another 79 million shares or about P2.5 billon worth of stocks, based on the current market price.

Ayala Land said on Friday the shares were sold to various domestic and international investors, including qualified institutional buyers in the United States.

“The transaction was upsized by over 40 percent, anchored by high-quality long-only institutional investors,” Ayala Land said on Friday.

The share sale on Friday was arranged by BPI Capital Corp., UBS AG Singapore Branch, and CLSA Ltd.

READ: New asset injection to benefit AREIT

AREIT previously announced the planned infusion of Ayala Land projects worth nearly P22 billion.

These include Ayala Triangle Gardens Tower 2, luxury mall Greenbelt wings 3 and 5 and Holiday Inn and Suites in Makati, as well as Seda Hotel at Ayala Center Cebu. It is also taking over a 276-hectare industrial land in Zambales from ACEN for P6.8 billion.