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Ayala Land shares dip amid AREIT asset-share swap deal

By Mariedel Irish U. Catilogo, Researcher

SHARES in Ayala Land, Inc. fell last week after the board of Ayala-led real estate investment trust AREIT, Inc. board approved a P22.48-billion property-for-share swap agreement with the company.

Data from the Philippine Stock Exchange (PSE) showed a total of P1.50 billion worth of 54.10 million shares in Ayala Land were traded from March 6-10, making it the fifth most actively traded stock in the local bourse last week.

The property company fell by 6.7% week on week to P26.45 per share on Friday from its P28.35 finish on March 3. Year to date, the stock has declined by 14.1%.

“It’s the share price adjusting to AREIT share for asset swap transaction as Ayala Land will have to let go of some rental assets, but the transaction effectively monetizes its assets and the price decline is an opportunity to buy,” First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message on Friday.

“Ayala Land’s balance sheet will get a boost by way of added liquidity and its profit and loss (P&L statement) for any realized gain on the asset sale,” Ms. Ulang said.

In a disclosure on Wednesday, AREIT said it had received the green light for the property-for-share swap agreement with Ayala Land and its subsidiaries Ayala Land Malls, Inc. and North Beacon Commercial Corp.

The deal is set to add P22.5 billion worth of offices and malls from Ayala Land in exchange for 607.56 million primary common shares of AREIT, subject to a third-party fairness opinion and the approval of shareholders at their annual meeting on April 26.

Both companies expect the agreement to be completed within the year.

The assets, which are mostly located in the Makati central business district, include the newest One Ayala Avenue East and West BPO Towers at the corner of Ayala Ave. and EDSA, as well as the Glorietta 1 and 2 mall wing and BPO buildings at Ayala Center.

The MarQuee mall in Angeles, Pampanga, located close to the Angeles exit of the North Luzon Expressway, will also be added to AREIT’s portfolio.

Ryan Vincent L. Parlade, equity analyst at The First Resources Management and Securities Corp., attributed Ayala Land’s performance to the market’s bearish trend fueled by negative domestic and foreign economic sentiments.

“Ayala Land was also affected by the potential return of the Federal Reserve’s aggressive monetary tightening plans which may trigger the Bangko Sentral ng Pilipinas (BSP) also to hike their interest rates which spoiled the investor sentiment towards the property sector,” Mr. Parlade said in an e-mail.

The central bank has increased its borrowing costs to a total of 400 basis points since May 2022, bringing the key policy rate to 6%, the highest in nearly 16 years.

The BSP is set to announce rate hikes in its March 23 meeting.

Both analysts said that the agreement will benefit the company as this will stabilize the real estate company’s balance sheet.

“Ayala Land will benefit from the asset swap with AREIT, a boost for both the P&L and balance sheet as it monetizes rental assets,” Ms. Ulang said.

Ayala Land recorded a net income attributable to the parent firm amounting to P18.62 billion last year, up by 52.2% from P12.23 billion in 2021. Its revenue increased by 19.2% to P126.56 billion in 2022 from P106.14 billion previously.

Mr. Parlade estimates Ayala Land’s earnings to reach P3.65 billion in the first quarter of 2023 “considering the significant uptick in its commercial lot sales, recovery of commercial leasing, and robust contributions from its mall segment.”

“For the coming week, we are currently looking at the P26.00 level as strong support for Ayala Land followed by the P25.40 level. On the other hand, we are placing our resistance levels at P27.80 and P29.00,” Mr. Parlade said.

Ms. Ulang placed Ayala Land’s support levels at P25.00 and its resistance at P30.00.

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