RLC infusing nine malls into REIT in P30.67-B asset swap

By Revin Mikhael D. Ochave, Reporter

GOKONGWEI-LED property developer Robinsons Land Corp. (RLC) is infusing nine malls into its real estate investment trust, RL Commercial REIT, Inc. (RCR), under a P30.67-billion property-for-share swap.

The malls, with a combined gross leasable area (GLA) of 324,107.75 square meters (sq.m.), will be exchanged for 3.83 billion primary common shares of RCR priced at P8 apiece.

The malls to be infused include Robinsons Dasmariñas, Robinsons Starmills, Robinsons General Trias, Robinsons Cybergate Cebu, Robinsons Tacloban, Robinsons Malolos, Robinsons Santiago, Robinsons Magnolia, and Robinsons Tuguegarao.

The transaction, supported by an accredited appraiser and a third-party fairness opinion, is subject to regulatory approvals and will be presented during a special shareholders’ meeting on Aug. 13.

RLC and RCR approved the transaction in separate board meetings on Thursday, the companies said in separate disclosures.

Trading of RCR shares was suspended for one hour on Thursday afternoon following the announcement of the asset infusion.

The transaction will add to RCR’s existing portfolio, which currently consists of 828,000 sq.m. of GLA — comprising 12 mall assets with 289,000 sq.m. of GLA and 17 office assets with 539,000 sq.m. of GLA.

In 2023, RLC infused 13 mall and office properties worth P33.9 billion into RCR.

DragonFi Securities, Inc. Equity Research Analyst Jarrod Leighton M. Tin said in a Viber message that the transaction will expand the geographic footprint of RCR’s mall portfolio.

“With this addition, RCR’s mall count will rise from 12 to 21, and its mall GLA will grow 112% to over 613,000 sq.m. — now exceeding its office GLA,” he said.

“This marks another step in RCR’s transformation into a multi-asset REIT, bringing in high-yielding retail assets to support long-term dividend-per-share growth,” he said.

Mr. Tin said the infusion may bolster RCR’s prospects for inclusion in the Philippine Stock Exchange Index (PSEi), which features the 30 most actively traded and capitalized local stocks.

He added that the P8 share price in the transaction reflects a 13.3% premium over RCR’s last traded price of P7.06 per share as of Thursday.

“The enlarged asset base and public float further strengthen RCR’s case for PSEi inclusion. RCR is optimizing its portfolio with more retail exposure instead of office exposure, which has been facing some weakness with the office oversupply,” Mr. Tin said.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said the asset infusion will diversify RCR’s portfolio and reinforce its position as “one of the country’s top REITs.”

“Mall assets are seen as attractive given favorable consumer trends. The valuation is fair and we expect the deal to be dividend-accretive,” he said in a Viber message.

AP Securities, Inc. Research Analyst Cholo Miguel C. Ramirez said the transaction is expected to lead to higher rental income and dividend payouts for RCR.

“The continued dividend growth supports the management’s goal of tripling its market cap from P100 billion to P300 billion. The current market capitalization is at P112 billion, from P92 billion by end-2024,” he said in a Viber message.

Meanwhile, Unicapital Securities, Inc. Research Head Wendy B. Estacio-Cruz said in a Viber message that RCR’s public float will increase to 34% following the transaction, exceeding the 33.33% minimum public ownership requirement under the law.

“Given the strong earnings growth of shopping malls over the past two years, malls are expected to make up the bulk of RLC’s future asset infusions into RCR,” she said.

Last month, RLC said it is targeting P25 billion in net income by 2030 as part of its Vision 5-25-50 roadmap, which coincides with its 50^th anniversary. One of the roadmap’s key strategies is to leverage RCR to grow its portfolio.

For the first quarter, RCR’s net income rose by 47% to P1.66 billion, supported by steady occupancy rates and last year’s asset infusion. RLC’s attributable net income increased by 4% to P3.48 billion, driven by the growth of its malls, offices, hotels, and logistics segments.

On Thursday, RLC shares rose by 1.57% or 20 centavos to P12.96 apiece, while RCR shares gained 0.86% or six centavos to close at P7.06 each.