PSE Points to Ponder

AREIT debuted in the market with a 27 per share public offering. At that time we said that buying AREIT at 27 could inflict capital loss as the market will have to price it down to set the appropriate yield for AREIT which could be around 5.5% to 7%. At the time AREIT was listed in the market, dividends were not set, so we anticipated that AREIT will have to move down towards a zero dividend yield until dividends are declared . AREIT indeed plunge to a low of 24.10 a share. AREIT eventually declared dividends and set a dividend policy. At the current level of dividends and at the current price of 25.60 a share, AREIT’s yield is at 4.82%. AREIT may still move downward towards a yield of 6% to 7% inflicting holders further capital loss. Double Dragon Properties Corp. ( DD ) had issued cumulative, non-voting, non-participating, redeemable at the option of DD, convertible at the ratio of 1 preferred share to 1 common share, perpetual Preferred Shares now trading as DDPR . D...

No doubt the COVID-19 pandemic has wreaked havoc on the real estate industry. The pandemic has put to test the strength of the finances and operating capabilities of the real estate companies. Pandemic distinguishes the strongest from the rest. The biggest real estate company, SM Prime Holdings, Inc. ( SMPH ) is seen to weather the storm. SMPH has a fortress balance sheet. It can generate at least 60 Billion Pesos of revenue and cash flows without spending capital as they have an inventory of built units of 12,000. This was have discussed earlier. Meanwhile ALI ‘s best and the brightest are hustling to crystallize the values of ALI’s assets. They have just raised 13.6 Billion from the AREIT public offering. In Rockwell Land Corporation ( ROCK ) we saw vulnerability. As of end of June 30, 2020 (1H 2020) ROCK had a cash balance of only 3.1 Billion Pesos after borrowing 4 Billion Pesos. ROCK is facing debt repayment in the next 12-month period of 7.1 Billion Pesos. And t...

We have reported earlier that AREIT may have to sink further until it finds the yield. In the said report we said that all the talks about its yield are all based on speculations from brokers, analyst, and commenters. We said at that time that AREIT’s yield is zero until AREIT declares dividend and it is going to sink because the yield is zero. It will sink further until it finds the yield. We feel that we have been heard by AREIT and the Ayala group. Just today AREIT declares a dividend. This was announced in an emergency disclosure today. Please see attached copy of the disclosure below. AREIT-08172020-Material-Information-Transactions Download In the trading today, AREIT attempted to rally but towards the end it lost steam to end at 25.95. With the cash dividend the market will now have a clear guide on how to price AREIT to get the yield it desires. Finally, the day of reckoning for AREIT holders has come. We will now see how the market will price AREIT. The dust wi...

MM and AREIT are two different public offerings, thus, the difference in results. Holders of AREIT may have missed the difference of the two public offerings. MM is a pure initial public offering. It means shares offered to the public comes from the unissued shares of MM or the so called “primary shares.” All the proceeds of the MM initial public offering went into the coffers of MM. The proceeds of the public offering more than doubled the size of MM’s balance sheet. From 0.9 Billion prior to the IPO to around 2.4 Billion post-IPO. Because the proceeds of MM’s IPO went to its coffers, MM will be able to utilize the proceeds of its IPO to grow the business and create more value to its shareholders including those who participated in the IPO. The more value a company creates the more the market rewards, thus, the rise in value of the company’s shares. In AREIT, the total proceeds of around 13.5 Billion Pesos of the public offering went to Ayala Land,...