Robinsons Land to sell P33.9-B of malls and offices to RCR

Robinsons Land [RLC 15.74 ?0.4%; 55% avgVol] [link] disclosed that its board of directors approved a property-for-share swap deal with its REIT subsidiary, RL Commercial REIT [RCR 5.20 ?0.2%; 56% avgVol], that will send 11 malls and two office towers to RCR in exchange for 4.99 billion shares of RCR at a valuation of 33.9 billion. The implied per-share price of RCR in this deal is P6.80/share, which is a 30.7% premium over RCR’s Friday closing price. Once complete, the transaction will make RCR the PSE’s largest mall REIT.

MB BOTTOM-LINE: This is an enormous departure from RCR’s office-only strategy to this point, and a welcome one for shareholders considering the troubling performance of the commercial office sector in recent years and the lack of good news for any kind of pickup in the short- or medium-term. RCR hopes to get SEC approval for the transaction in FY24, but the SEC has not been very predictable when it comes to the approval times of these property-for-share swap transactions. Some are quick, while others seem to take an inappropriate amount of time to get approved. This transaction will lead to dividend growth, which (all other things being equal) should lead to RCR share price growth to balance out the yield. RCR is one of the cheapest REITs on the PSE in terms of its distributable income to price multiple. 

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