PNB shareholders to be rewarded dividends in spinoff firm

Tycoon Lucio Tan-led Philippine National Bank (PNB) seeks to share with stockholders any windfall from its program to unlock values from idle big-ticket real estate holdings by declaring as property dividends shares in the subsidiary holding those assets.

PNB’s board approved the declaration of shares of PNB Holdings Corp. as property dividends to stockholders on record as of May 18.

Through the distribution of PNB Holdings’ shares via the declaration of the property dividends, all shareholders of PNB will thus become part owners of the unit. The shareholders will benefit from future potential gains from the development of properties, either through potential dividends and/or through the increase in the valuation of the shares.

Earlier this year, PNB also obtained regulatory approval to make additional investments in PNB Holdings in exchange for certain properties.

Major properties

The investment in PNB Holdings and the dividend declaration are two important phases of the bank’s strategic initiative to recognize the unrealized value of its three major properties: the 10-hectare PNB Financial Center in Pasay, PNB Makati Center on Ayala’s Central Business District, and the 8,000-square-meter foreclosed prime property at the corner of Buendia Avenue and Paseo De Roxas in Makati. The fair value of these three assets is estimated at P50 billion.

“The timing of the development of these properties are already being studied by the real estate experts, who are already working closely with PNB Holdings Corp. and PNB,” bank president and chief executive Wick Veloso said.

“The distribution of PNB Holdings shares through the dividend declaration allows PNB stockholders to share from the benefit of the realized values of the properties and any future valuation gains,” he added.

Real estate monetization

PNB is pursuing plans to reduce its low-earning assets to build up its financial position. PNB Holdings increased its authorized capital stock to reflect the value of the three prime properties.

Property dividends occur when a company declares and distributes assets other than cash, such as shares of stocks in a company’s subsidiary or affiliate or tangible products of the company.

This real estate monetization program is seen to translate to extraordinary earnings that may even exceed PNB’s current market capitalization of P35 billion.

This program is also seen to free up more cash that parent conglomerate LT Group Inc. can use to maintain or boost dividends, especially as the group strives to shore up cash-strapped flag carrier Philippine Airlines.

Shares of PNB surged by 12.85 percent to close at P25.90 apiece yesterday as investors welcomed the bank’s property dividend declaration.