PSE incorporates realty company with P1B capitalization

The Philippine Stock Exchange [PSE 190.00, down 1.6%; 11% avgVol] [link] said that the SEC approved the PSE’s incorporation of a wholly-owned realty company, PSE Realty Inc. (PRI), with an initial capitalization of P1 billion and the power to own and manage real property of all kinds. The PSE didn’t provide any additional information about its move or intentions. The PSE owns condominium units at Exchange Plaza in Makati City valued at P994 million based on a January 2024 appraisal report.

MB bottom-line: On the surface, this is basically a nothingburger, because its trivially easy for a corporation to incorporate a subsidiary. Most PSE-listed companies will have the legal and financial resources in-house to crank out a transaction like this as a fun side-project. I’ve seen some people joking that the market sucks so bad that even the PSE itself is looking to pivot into real estate. That’s a good joke based on the painful reality of our sideways stock market, but I think it’s probably a move by the PSE to both maximize the value of its real estate assets and reorganize the ownership of those assets to streamline any future transactions. If the PSE wanted to sell the condos to raise a huge pile of cash, then grouping the condo assets in a tidy realty subsidiary like PSI makes a potential transaction much easier; they can sell the assets directly to a buyer, or sell the shares of the company that owns the assets. Hey, I know: the PSE should REIT its office space! They are always talking about how useful the REIT structure is to companies looking to raise a little capital. 

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