Merkado Barkada
September 20, 2024 | 8:10am
RL Commercial REIT [RCR 5.76, up 0.2%; 209% avgVol] [link] disclosed that the SEC approved its P33.9 billion acquisition of 13 properties from its parent company, Robinsons Land [RLC 15.90, down 1.1%; 98% avgVol], in exchange for approximately 5 billion primary RCR common shares. The transaction was deemed effective on the date of the SEC’s September 19 approval, which increased RCR’s issued and outstanding shares to approximately 15.7 billion and dropped its public float/ownership to 34.1%. This completes the third asset swap between RCR and RLC. While SEC approval was not granted until just yesterday, revenues from the transferred properties have been accruing to RCR since April 1, 2024.
MB bottom-line: Credit to the SEC for getting this approval done in what feels like record time. Just three months from board approval to SEC approval. Reducing that lag is beneficial to investors and shareholders. This is a massive injection that will have a significant impact on RCR’s dividend, which has already maintained an 11-quarter streak of increasing dividends since its IPO back in 2021. My only question is about how RCR will handle the “extra” income that accrued to it from the acquired properties in Q2 since it’s already distributed Q2 dividends from distributable income from that period. The easiest thing to do is just lump it in with the big pot of distributable income available for distribution in Q3 and Q4, but for consistency and comparison’s sake, it might be interesting to see if RCR declares a special dividend for that additional income. While the transaction technically dilutes existing RCR shareholders from a voting perspective, economically, it will add to the dividend and be a net positive. This is exactly how the REIT Law drafters wanted REITs to grow.
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