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Trading suspended: Ayalas have to let go of some AREIT after public float falls below floor limit due to P15.5B swap

The Philippine Stock Exchange (PSE) has suspended trading of AREIT Inc. after the Ayala group ended up owning more than the maximum in its P15.464 billion properties for shares swap with its subsidiaries.

“As a result of the transaction, unless otherwise resolved, AREIT’s public float will fall below the minimum required under existing rules and regulations. In case the public float falls below the minimum required for a REIT, the Exchange shall immediately impose a trading suspension,” the PSE said.

AREIT said public ownership will drop to 33.89 percent after the shares swap from the current 45.57 percent. Real Estate Investment Trust (REIT) firms are only allowed maximum majority ownership of 66 percent.

“AREIT will ensure that ALI will sell some of its shareholdings in AREIT prior to the execution of the property-for-share swap in order to ensure compliance with the minimum public ownership requirement,” the company said in a statement.

AREIT approved on March 16 to swap 483.254 million shares of the company in exchange for P15.464 billion worth of commercial properties owned by its parent, Ayala Land Inc., in a properties-for-shares swap deal at a strike price of P32 per share. The swap is being made in support of AREIT’s capital hike from P11.74 billion to P29.5 billion.

Both the swap and capital hike are subject to approval by its stockholders’ meriting in an annual meeting on April 23 and by the Securities and Exchange Commission. AREIT expects to finalize the transaction by May 2021.

Ayala Land’s stake in AREIT will increase to 53.13 percent from, 45.04 percent after the shares swap. Its subsidiaries that own the properties will take minor interest in AREIT after the swap – Westview Commercial Ventures at 2.48 percent; and Glensworth Development at 4.12 percent.

Aside from the public, Ayala Land Offices will also have its stake diluted to 6.38 percent from 9.39 percent due to the swap.

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