C06237-2024

SECURITIES AND EXCHANGE COMMISSIONSEC FORM 17-C

CURRENT REPORT UNDER SECTION 17
OF THE SECURITIES REGULATION CODE
AND SRC RULE 17.2(c) THEREUNDER

1. Date of Report (Date of earliest event reported)
Sep 26, 2024
2. SEC Identification Number
CS200613870
3. BIR Tax Identification No.
006-346-689
4. Exact name of issuer as specified in its charter
AREIT, Inc.
5. Province, country or other jurisdiction of incorporation
Makati City, Philippines
6. Industry Classification Code(SEC Use Only)
7. Address of principal office
28/F Tower One and Exchange Plaza, Ayala Ave. Makati City Postal Code 1226
8. Issuer's telephone number, including area code
(+632) 7908-3804
9. Former name or former address, if changed since last report
N/A
10. Securities registered pursuant to Sections 8 and 12 of the SRC or Sections 4 and 8 of the RSA
Title of Each Class Number of Shares of Common Stock Outstanding and Amount of Debt Outstanding
Common Shares 2,368,606,573
11. Indicate the item numbers reported herein
Item 9 - Other Matters

The Exchange does not warrant and holds no responsibility for the veracity of the facts and representations contained in all corporate disclosures, including financial reports. All data contained herein are prepared and submitted by the disclosing party to the Exchange, and are disseminated solely for purposes of information. Any questions on the data contained herein should be addressed directly to the Corporate Information Officer of the disclosing party.

AREIT, Inc.AREIT

PSE Disclosure Form REIT-4 - Acquisition or Disposition of Assets
References: Rule 5 of the IRR of the REIT Act of 2009 and
Section 6 of the Amended PSE Listing Rules for REITS

Subject of the Disclosure

Property-for-Share Swap between AREIT, Inc. (“AREIT”), Ayala Land, Inc. (“ALI”), its subsidiaries, Greenhaven Property Ventures, Inc. (“Greenhaven”) and Cebu Insular Hotel Co., Inc. (“Cebu Insular”) and Buendia Christiana Holdings Corp. (BCHC)
Background/Description of the Disclosure

Please be informed that AREIT, Inc. (AREIT) received today the Securities and Exchange Commission’s (SEC) approval of its property-for share swap with Ayala Land, Inc. (ALI), Greenhaven Property Ventures, Inc. (Greenhaven), Cebu Insular Hotel Co., Inc. (Cebu Insular), and Buendia Christiana Holdings Corp. (BCHC), involving the issuance of 841,259,412 AREIT primary common shares to ALI, Greenhaven, Cebu Insular, and BCHC, in exchange for four (4) commercial buildings located in Ayala Center Makati and Ayala Center Cebu, and a 276-hectare parcel of industrial land located in Zambales, with an aggregate value of ¿28,602,820,008.00, within the fair range of values as validated by a third-party fairness opinion provider, under the Deed of Exchange dated 19 March 2024.

In line with this, the parties have executed an Amendment to the Deed of Exchange for AREIT to recognize the income from the new assets effective July 1, 2024.

AREIT will apply for the Bureau of Internal Revenue Certificate Authorizing Registration for the new assets and the listing of the shares in favor of ALI, Greenhaven, Cebu Insular, and BCHC within the fourth quarter of 2024.
Date of Approval by Board of Directors Nov 29, 2023
Details of the Acquisition or Disposition
Date Mar 19, 2024
Description of the Assets Involved

Ayala Triangle Tower 2 - 63,150 sq. meters of gross leasable space completed in 2021. A Triple A Headquarter Office with overall occupancy of 98% located at Ayala Triangle Gardens, Makati City

Greenbelt 3 & 5 - 93,732 sq. meters of gross leasable space completed in 2004 (Greenbelt 3 renovation completion in 2022) and 2007 respectively. A Premier Lifestyle Mall with an overall occupancy of 100% located within the Ayala Center Makati

Holiday Inn & Suites Makati - 26,218 sq. meters of gross leasable space completed in 2013. A Contemporary Business Hotel with an overall occupancy of 100% located within the Ayala Center Makati.

Seda Ayala Center Cebu - 13,759 sq. meters of gross leasable space completed in 2018. A Contemporary Business Hotel with an overall occupancy of 100% located within Ayala Center Cebu.

Zambales Industrial Land - 276-hectare parcel of industrial land (Solar Power Plant) located in Zambales with an overall occupancy of 100%.
Details of the Assets
Type (land, building, etc.) Location Size Rights Acquired (Ownership/ Leasehold etc.)
Building Ayala Triangle Gardens, Makati City 63,150 sqm Leasehold
Lifestyle Mall Ayala Center, Makati City 93,732 sqm Leasehold
Business Hotel Glorietta, Ayala Center, Makati City 26,218 sqm Leasehold
Business Hotel Ayala Center Cebu, Cebu Business Park 13,759 sqm Leasehold
Industrial Land Palauig, Zambales 2,759,135 sqm Freehold
Terms and conditions of the transaction
Contract price, valuation and the methods used to value the assets

Properties valued at approximately Php28,602,820,008.00 in exchange for 841,259,412 common shares (“AREIT shares”) at an exchange price of Php34.00 per share, set at a 3.75% premium over the 30-day VWAP or the Market Price of Php32.77, which are all within the price range indicated in the Fairness Opinion issued by FTI Consulting, and the Appraisal Reports issued by Cuervo.

The assets were valued using the Discounted Cashflows (“DCF”) Approach as the primary method to estimate the fair value of the AREIT shares and the Properties. Under the DCF approach, FTI Consulting discounted the cashflows of AREIT and the Properties based on a weighted average cost of capital (WACC) using the Capital Asset Pricing Model. The Comparable Companies Approach and Precedent Transactions Approach were used as secondary methods to cross-check the value of the AREIT shares. The Direct Capitalization Approach was used to cross-check the value of the Properties.
Terms of payment

The shares shall be issued in the name of ALI, Greenhaven, Cebu Insular, and BCHC and the Properties and lands ownership transferred to AREIT upon confirmation of the Securities and Exchange Commission of the exemption from registration for the issuance of the shares, and the valuation for the Transaction.
Conditions precedent to closing of the transaction, if any

Approval of the Securities and Exchange Commission of the exemption from registration for the issuance of the shares, and the valuation for the Transaction
Any other salient terms

The property-for-share swap will qualify as a tax-free exchange under Section 40(C)(2) of the Tax Code.

The Company shall likewise apply for the additional listing of the shares resulting from the Transaction with the PSE. The majority vote representing the outstanding shares held by the minority stockholders present and represented in the special stockholders’ meeting of AREIT last February 12, 2024 was likewise obtained for the issuance of the waiver of the requirement to conduct a rights or public offering of the shares to be subscribed by ALI as part of the requirements of the PSE.
Identity of the person(s) from whom the assets were acquired or to whom they were sold
Name Nature of any material relationship with the Issuer, their directors/ officers, or any of their affiliates
Ayala Land, Inc. Ayala Land, Inc. is the sponsor of AREIT, and owns 58.43% (directly and indirectly) of AREIT
Greenhaven Property Ventures, Inc. 100% owned by AyalaLand Hotels and Resorts Corp. (AHRC). AHRC is a wholly-owned subsidiary of Ayala Land, Inc.
Cebu Insular Hotel Co., Inc. 62.94% owned by AHRC, 37.06% owned by Ayala Land, Inc. AHRC is a wholly-owned subsidiary of Ayala Land, Inc.
Buendia Christiana Holdings Corp. Buendia Christiana Holdings Corp. is a wholly-owned subsidiary of ACEN Corporation (PSE: ACEN). ACEN is 58.16% owned by Ayala Corporation, through the latter’s 100%-owned subsidiary AC Energy and Infrastructure Corporation. Ayala Corporation likewise owns 51.01% of Ayala Land, Inc.
Discussion on the probable impact of the transaction on the business, financials and other aspects of the REIT

The Properties are expected to contribute further to AREIT’s operating cashflows, boosting dividends per share. At capitalization rates of 6.8% and 6.92% for the properties of ALI and the Subsidiaries, and the BCHC industrial land, respectively, the Properties were valued based on a stable level of operating income and the expected yield of the property after considering a long-term sustainable growth of 3% for the office asset, 2.5% for mall and hotel assets, and 1.5% for industrial land. AREIT's 2023 yield is approximately 6.6% from its existing assets based on the 30- day VWAP of P32.77. Hence, the asset-for-share swap would be accretive and potentially increase the overall yield to approximately 6.96% after the new assets are infused. Estimated yields and total shareholder return are subject to actual operating performance and market conditions.
Other Relevant Information

The disclosure is amended to reflect the receipt of SEC's approval of the transaction.
Filed on behalf by:
Name Michael Blase Aquilizan
Designation Manager