Areit Inc.PSE: AREIT

Acquisition or Disposition of Assets

May 20, 2022 at 12:34 AM UTC · Issued by Areit Inc.

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) May 19, 20222. SEC Identification Number CS2006138703. BIR Tax Identification No. 006-346-6894. Exact name of issuer as specified in its charter AREIT, Inc.5. Province, country or other jurisdiction of incorporation Makati City, Philippines6. Industry Classification Code(SEC Use Only) 7. Address of principal office 28/F Tower One and Exchange Plaza, Ayala Ave. Makati CityPostal Code12268. Issuer's telephone number, including area code (+632) 7908-38049. Former name or former address, if changed since last report N/A10. 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	1,508,910,810

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") and Ayala Land, Inc. ("ALI")

Background/Description of the Disclosure

At the special meeting of the Board of Directors of AREIT (or the "Company") held last March 10, 2022, and the annual stockholders' meeting of the stockholders of AREIT held last April 21, 2022, the Board of Directors and AREIT's stockholders approved the issuance of 252,136,383 primary common shares of stock in the Company (the "Shares") to ALI at an issue price of Php44.65 per share in exchange for identified properties valued at Php11,257,889,535.91 ("Transaction"). The Shares will be issued out of AREIT's authorized capital stock.

On May 19, 2022, AREIT and ALI executed the Deed of Exchange in implementation of the Transaction

Date of Approval by Board of Directors

Mar 10, 2022

Details of the Acquisition or Disposition

Date	May 19, 2022

Description of the Assets Involved

eBloc 1 - 20,842 sq. meters of gross leasable space completed in 2009. A grade A, PEZA-accredited building with overall occupancy of 96%.

eBloc 2 - 27,727 sq. meters of gross leasable space completed in 2011. A grade A, PEZA-accredited building with overall occupancy of 98%.

eBloc 3 - 15,233 sq. meters of gross leasable space completed in 2014. A grade A, PEZA-accredited building with overall occupancy of 97%.

eBloc 4 - 16,167 sq. meters of gross leasable space completed in 2015. A grade A, PEZA-accredited building with overall occupancy of 99%.

ACC Tower - 27,517 sq. meters of gross leasable space completed in 2016. A grade A, PEZA-accredited building with overall occupancy of 97%.

Tech Tower 1 - 16,813 sq. meters of gross leasable space completed in 2018. A grade A, PEZA-accredited building with overall occupancy of 91%.

Details of the Assets

Type (land, building, etc.)	Location	Size	Rights Acquired (Ownership/ Leasehold etc.)
Building	Cebu IT Park	20,842 sqm	Ownership
Building	Cebu IT Park	27,727 sqm	Ownership
Building	Cebu IT Park	15,233 sqm	Ownership
Building	Cebu IT Park	16,167 sqm	Ownership
Building	Cebu IT Park	27,517 sqm	Ownership
Building	Cebu IT Park	16,813 sqm	Ownership

Terms and conditions of the transaction

Contract price, valuation and the methods used to value the assets

Properties valued at Php11,257,889,535.91 in exchange for 252,136,383 common shares ("AREIT shares") at an exchange price of Php44.65, which are all within the price range indicated in the Fairness Opinion issued by Isla Lipana Co., and the Appraisal Reports issued by Asian Appraisal Company, Inc.

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, Isla Lipana 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 and the Properties transferred to AREIT upon approval of the Securities and Exchange Commission of the subscription of ALI of AREIT shares in exchange for the Properties.

Conditions precedent to closing of the transaction, if any

Approval of the Securities and Exchange Commission of the subscription of ALI of AREIT shares in exchange for the Properties.

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 April 21, 2022 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 60.32% (directly and indirectly) of AREIT

Discussion on the probable impact of the transaction on the business, financials and other aspects of the REIT

As the first Philippine REIT which successfully listed amidst the pandemic, AREIT aspires to further grow its leasing portfolio with prime and stable assets. The Swap will further increase AREIT's portfolio from 549 thousand square meters to 673 thousand square meters of gross leasable area; increase AREIT's assets under management from PhP53B to Php64B; and at the transaction price of Php44.65 per share, the assets to be infused have a projected yield of 6%. At the price of Php44.65, AREIT's 2021 yield is approximately 4% from its existing assets. The Swap will be accretive and potentially increase the overall yield to 5% after the new assets are infused.

Other Relevant Information

AREIT shall seek approval of the SEC on the subscription of ALI of shares in exchange for the Properties to be transferred to AREIT. Upon approval of the SEC of the property-for-share swap between AREIT and ALI, the Parties shall apply for the Certificate Authorizing Registration with the BIR, and the listing of the additional shares with the Philippine Stock Exchange, within the year.

Filed on behalf by:

Name	Michael Blase Aquilizan
Designation	Associate Manager