ALI infusing P20 billion mall, hotel assets to AREIT

MANILA, Philippines — Property giant Ayala Land Inc. (ALI) is infusing P20 billion worth of mall and hotel assets into AREIT Inc. in a transaction that will expand the real estate investment trust’s assets under management to P179 billion.

ALI said the infusion would not only expand AREIT’s assets under management, but also further diversify its asset base across malls, offices, hotels and industrial land.

Under the proposed transaction, ALI and the subsidiaries will subscribe to 462.48 million AREIT primary common shares in exchange for Glorietta 4 Mall in Makati, Ayala Malls Capitol Central in Bacolod, Ayala Malls Circuit in Makati, Ayala Malls Cloverleaf in Quezon City, New World Makati Hotel in Makati and Seda Vertis North in Quezon City.

The assets have an aggregate transaction value of P17.33 billion at an exchange price of P37.48 per share.

AREIT’s board also approved the cash acquisition of Fairmont Raffles Hotel Makati from ALI subsidiary ALI Makati Hotel and Residences Inc. for P2.62 billion.

The proposed mall infusions will be structured under direct lease arrangements, consistent with AREIT’s existing office portfolio, enabling AREIT to directly recognize rental income from the underlying retail leases.

The hotel infusions, meanwhile, will be structured under a hybrid master lease arrangement consisting of a fixed base rent and a variable component linked to hotel revenues, providing a combination of stable recurring income and participation in operating performance.

Totaling nearly 350,000 square meters of building gross leasable area, the additional assets will increase AREIT’s total GLA to five million sqm, consisting of 2.2 million sqm of building GLA and 2.9 million sqm of industrial land.

Post-transaction, offices will comprise 53 percent of AREIT’s P179 billion assets under management, while retail, hotels and land will account for 33 percent, nine percent and five, respectively.

“The proposed infusions also represent an important step in the evolution of AREIT’s growth model, with the direct and hybrid lease structures expected to provide additional participation in the underlying operating performance of these assets beyond traditional contractual rental escalations,” AREIT president and CEO Alberto de Larrazabal said.

ALI said the cash proceeds generated from AREIT infusions are strategically redeployed to fund its pipeline of leasing and hospitality assets.

The company maintains majority ownership and full consolidation of these infused properties, ensuring they remain a core part of the long-term portfolio while strategically unlocking capital to fuel future growth.

ALI posted revenues of P37.5 billion and net income of P6.1 billion in the second quarter, a sequential growth of 13 percent versus the prior quarter despite challenges in the operating environment.