AREIT : Comprehensive Corporate Disclosure on Issuance of Shares

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) Mar 17, 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 ([phone]. Former name or former address, if changed since last report AyalaLand REIT, Inc.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	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 LR-1 - Comprehensive Corporate Disclosure on Issuance of Shares (Private Placements, Share Swaps, Property-for-Share Swaps
or Conversion of Liabilities/Debt into Equity)Reference: Rule on Additional Listing of Securities

Subject of the Disclosure

Property-for-Share Swap between AREIT, Inc. and Ayala Land, Inc. ("ALI")

Background/Description of the Disclosure

At the special meeting of the Board of Directors of AREIT, Inc. (the "Company" or "AREIT") held last March 10, 2022, the Board of Directors approved the issuance of 252,136,383 primary common shares of stock in the Company (the "Shares") to Ayala Land, Inc. ("ALI") at an issue price of Php44.65 per share in exchange for identified properties valued at Php11,257,889,535.91. Definitive agreements on the Transaction (as defined below) will be duly disclosed to the Exchange and the Securities and Exchange Commission ("SEC") upon execution.

Date of Approval by Board of Directors

Mar 10, 2022

Comprehensive Corporate Disclosure

Description of the proposed transaction including the timetable for implementation, and related regulatory requirements

The Company and ALI will execute a property-for-shares swap transaction whereby the Company will issue the Shares to ALI in exchange for the identified properties (Table 1 of the attached letter) valued at Php11,257,889,535.91, at a transaction price of Php44.65 per share The Properties will be used as ALI's payment for the Shares (the "Transaction"). The Transaction will be implemented as a tax-free exchange, subject to a fairness opinion on the valuation of the Shares and of the Properties prepared and issued by Isla Lipana & Co. ("Isla Lipana"), an independent fairness opinion provider accredited by both the SEC and the PSE. The Properties have been evaluated by AREIT Fund Managers, Inc. ("AFMI") and have been appraised by the Company's property appraiser, Asian Appraisal Company, Inc. ("Asian Appraisal"). The Transaction is subject to the approval of AREIT stockholders at the Company's annual meeting to be held on 21 April 2022. AREIT will apply for the additional listing of the shares resulting from the Transaction. The majority vote representing the outstanding shares held by the minority stockholders present and represented in the Special Stockholders' Meeting on 21 April 2022 shall likewise be obtained for the issuance of the waiver of the requirement to conduct rights or a public offering of the shares to be subscribed by ALI, as part of the requirements of the Exchange in connection with the additional listing of shares with the Exchange. The exchange of the Shares for the Properties will qualify as a tax-free exchange under Section 40(C)(2) of the Tax Code, details of which can be found on Page 3 (Exceptions) of the attached letter. The Company expects to execute the Deed of Exchange and file the application for approval of the original issuance of shares with the SEC within May 2022, and the issuance of the Certificates Authorizing Registration ("CAR") with the relevant Revenue District Office of the Bureau of Internal Revenue ("BIR") within the fourth quarter of 2022. The SEC's approval of the Transaction and the BIR's CAR issuance are expected to be issued within the year. The Company shall likewise apply for the additional listing of shares with the Exchange by the first quarter of 2023. The indicative timetable for implementation of the Transaction is shown on Table 2 of the attached letter.

Rationale for the transaction including the benefits which are expected to be accrued to the listed issuer as a result of the transaction

As the first Philippine Real Estate Investment Trust (REIT) successfully listed amidst the COVID-19 pandemic, AREIT aspires to grow its leasing portfolio with prime and stable assets. Since its IPO, AREIT delivered on its growth plan, resulting in a 94% total shareholder return from dividend yield and price appreciation, based on the closing price of P49.30 on 28 February 2021. AREIT started with 153 thousand square meters equivalent to Php30 billion of Assets Under Management ("AUM") in 2020. By December 2021, this has grown to 549 thousand square meters, equivalent to Php53 billion in AUM. With this new asset infusion, AREIT will grow further and reach 673 thousand square meters or Php64 billion in AUM in 2022 - a 213% increase since AREIT went public. This growth exceeds its target to double in size within two years from its IPO. The properties are expected to contribute further to its operating cashflows, boosting dividends per share. Specific to this new infusion, at an issue price of Php44.65 per share, the assets for infusion have a projected yield of 6%. At the price of P44.65, AREIT's 2021 yield is approximately 4.0% from its existing assets. Hence, the asset-for-share swap would be accretive and potentially increase the overall yield to approximately 5% after the new assets are infused. Coupled with rental escalations and asset growth, total shareholder return is projected at 10%. Estimated yields and total shareholder return are subject to actual operating performance and market conditions. The Properties transferred to AREIT, including the gross leasable area, location, occupancy, and average rent, are in Annex C of the attached letter.

The aggregate value of the consideration, explaining how this is to be satisfied, including the terms of any agreements for payment on a deferred basis

The Properties are valued at approximately Php11.26 Billion by Isla Lipana and the Appraisal Reports issued by Asian Appraisal (Annex B of the attached letter). The transaction price was set at Php44.65 per share within the range of values provided in the Fairness Opinion (Annex A of the attached letter). Subject to regulatory approvals (including BIR's CAR issuance confirming that the Transaction is a tax-free exchange under the Tax Code, as amended, and SEC's approval of the original issuance of shares), the Transaction will close upon the listing of the Shares with the PSE.

The basis upon which the consideration or the issue value was determined

The Discounted Cashflows ("DCF") Approach was used as the primary method to estimate the fair value of the AREIT shares and 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.

Detailed work program of the application of proceeds, the corresponding timetable of disbursements and status of each project included in the work program. For debt retirement application, state which projects were financed by debt being retired, the project cost, amount of project financed by debt and financing sources for the remaining cost of the project

The Company expects to execute the Deed of Exchange and file the application for approval of the original issuance of shares with the SEC within May 2022, and the issuance of the Certificates Authorizing Registration ("CAR") with the relevant Revenue District Office of the Bureau of Internal Revenue ("BIR") within the fourth quarter of 2022. The SEC's approval of the Transaction and the BIR's CAR issuance are expected to be issued within the year. The Company shall likewise apply for the additional listing of shares with the Exchange by the first quarter of 2023.

Identity and/or corporate background of the beneficial owners of the shares subscribed, including the following

Beneficial Owners/Subscribers	Nature of Business	Nature of any material relationship with the Issuer and the parties to the transaction, their directors/officers or any of their affiliates
Ayala Land, Inc.	Integrated mixed-use property developer	ALI is the Sponsor of AREIT, and as of the date hereof, directly and indirectly owns 66.11% of AREIT shares, as show in Table 7 of the attached letter

Organizational/Ownership Structure of Subscribers

Controlling Shareholders of Subscribers	Number of Shares Held	%
Public float	7,833,723,251	52.89	Ayala Corporation
6,824,066,579	46.07	Directors, officers and employees	153,336,849
1.03	-	-	-

For subscribers with no track record or with no operating history: the Subscriber must present a statement of active business pursuits and objectives which details the step undertaken and proposed to be undertaken by the Issuer in order to advance its business. Projected financial statements shall only be required should there be references made in the Statement to forecasts or targets

The Subscriber, ALI, was registered with the SEC on 20 June 1988. It is the largest property developer in the country with a solid track record in developing large-scale, integrated, mixed-use, and sustainable estates that are now thriving economic centers. Additional information on ALI is included in the attached letter starting from page 5.

The interest which directors of the parties to the transaction have in the proposed transaction

Aside from their ownership of shares in the Company and ALI the directors of the parties do not have interest in the proposed Transaction.

Statement as to the steps to be taken, if any, to safeguard the interests of any independent shareholders

The 252,136,383 primary common shares to be issued to ALI will be discussed and taken up in AREIT's next Annual Stockholders' Meeting on 21 April 2022. The majority vote representing the outstanding shares held by the minority stockholders present and represented in the Special Stockholders' Meeting on 21 April 2022 shall likewise be obtained for the issuance of the waiver of the requirement to conduct rights or a public offering of the shares to be subscribed by ALI, as part of the requirements of the Exchange in connection with the additional listing of shares with the Exchange. The Company's Fund Manager on 9 March 2022 has endorsed the Transaction to the Company. The Company's Risk Management and Related Party Transactions Review Committee and the Board of Directors have reviewed Isla Lipana's fairness opinion on the Shares and the Properties, as well as the appraisal reports issued by Asian Appraisal. Asian Appraisal and Isla Lipana have issued appraisal Reports and a Fairness Opinion to establish the fairness of the valuation of the Shares and the Properties used in this Transaction.

Any conditions precedent to closing of the transaction

Subject to regulatory approvals (including BIR's CAR issuance confirming that the Transaction is a tax-free exchange under the Tax Code, as amended, and SEC's approval of the original issuance of shares), the Transaction will close upon the listing of the Shares with the PSE.

Change(s) in the composition of the Board of Directors and Management

-

Effects on the following

Ownership structure

Principal Shareholders	Before	After
Number of shares	%	Number of shares	%
Ayala Land, Inc.	801,641,623	53.13	1,053,778,006	59.84
AyalaLand Offices, Inc.	96,292,435	6.38	96,292,435	5.47
Westview	37,443,313	2.48	37,443,313	2.13
GDI	62,146,531	4.12	62,146,531	3.53
Public Ownership	511,386,907	33.89	511,386,908	29.04

Capital structure

Issued Shares

Type of Security /Stock Symbol	Before	After
Common Shares	1,576,240,780	1,828,377,163

Outstanding Shares

Type of Security /Stock Symbol	Before	After
Common Shares	1,508,910,810	1,761,047,193

Treasury Shares

Type of Security /Stock Symbol	Before	After
Treasury Shares	67,329,970	67,329,970

Listed Shares

Type of Security /Stock Symbol	Before	After
Common Shares	1,576,240,780	1,828,377,163

Effect(s) on the public float, if any

The Company will ensure that ALI sells some of its shareholdings in the Company prior to the property-for-shares swap in order to ensure compliance with the minimum public ownership requirements imposed upon the Company. The relevant disclosures on the sale of shareholdings, as well as the Reinvestment Plan for the proceeds received by ALI from the sale of shareholdings will be made in due course.

Effect(s) on foreign ownership level, if any

Foreign ownership level will decline

Other Relevant Information

None

Filed on behalf by:

Name	Michael Blase Aquilizan
Designation	Associate Manager