AREIT’s rise and resilience

Along the path to rebound, several challenges arising from economic disruptions and even spending powers still remain for the real estate sector to manage and conquer. But for AREIT, Inc., weathering these challenges substantiated its strength and resilience.

AREIT, the real estate investment trust company of Ayala Land, rose from the height of the pandemic. Since it was publicly listed in August 2020 — making it the first REIT on the Philippine Stock Exchange (PSE) — AREIT maintains its profitability to investors despite uncertain times and keeps expanding its assets.

The company’s portfolio started mainly with offices, which remain stable in terms of occupancy and tenancy despite the popularity of hybrid work arrangements because of the pandemic. Since then, other asset types were added and AREIT’s properties enjoy a high occupancy rate of 98%, with offices accounting for 69%, industrial lots at 15%, retail spaces at 12%, and a hotel at 4% of its gross leased area.

At the end of 2022, the company delivered a total shareholder return of 52% and dividends per share growth of 86% since it was listed in the PSE in August 2020. It also overtook the PSE and the property indices in the past two years with a 33% from price appreciation.

“These returns exemplified how a REIT, if properly structured and executed well, can deliver the combined benefits of a fixed-income instrument and equity — the hybrid benefits of REIT investing,” said AREIT President and CEO Carol T. Mills.

AREIT, Inc. is the first real estate investment trust to be listed in the Philippine Stock Exchange in August 2020.

“These outstanding results reflect the company’s commitment to our five investment fundamentals — a strong sponsor, exceptional asset quality in prime locations, stable long-term occupancy, above-inflation growth, and a team of experienced professional management,” Ms. Mills added.

AREIT also augmented its assets last year by adding six office buildings in Cebu worth around P11.26 billion. Through these new assets, the company’s portfolio expanded to 673,000 square meters (sq.m.) from 153,000 sq.m. when it started.

This year, AREIT seeks to further diversify its portfolio by bringing in more office and mall developments.

“AREIT’s strategy has been to seek opportunities for office properties and complement them with hotel and retail adjacencies within those office developments. In 2021, we also pursued an opportunistic acquisition of industrial land leased to Integrated Microelectronics (IMI) for its semiconductor manufacturing operations,” Ms. Mills said.

“With the pandemic behind us, we see a strong rebound in commercial businesses, particularly retail establishments. This improvement provides an opportunity to expand and balance AREIT’s portfolio, in line with its prospectus when we listed it as a commercial REIT,” she continued.

AREIT is about to undertake its most significant asset infusion yet this year, and among the properties to be included are the One Ayala East and West Towers, Glorietta 1 and 2 Mall Wings, and BPO Towers at Ayala Center in the Makati CBD as well as the Ayala Mall Marquee in Angeles, Pampanga. These new developments overall are valued at P22.5 billion.

“Combined with AREIT’s existing portfolio, these acquisitions will result in a more diversified mix of assets, with longer contracted leases and lower risk for investors. Finally, the acquisitions are yield accretive, consistent with what we have done in previous asset infusions, and align with our target total return of 10-12% per year,” Ms. Mills said.

Such a notable infusion will triple AREIT’s total assets since its initial public offering (IPO) to P87 billion in Assets Under Management with a gross leasable area of 863,000 sq.m. once approved by regulatory bodies.

Ayala Land (ALI) is AREIT’s sponsor. The real estate developer has 50 estates throughout the Philippines with a land bank of over 12,000 hectares. Its diversified portfolio includes office, residential, commercial, and industrial developments. ALI integrates sustainable practices in its projects, focusing on four areas such as site resilience, pedestrian mobility and transit connectivity, resource efficiency, and local economic development, which AREIT also adopted in its properties.

AREIT President and CEO receives the Best Diversified REIT (Philippines) Award from Professor Ong Seow Eng, Professor at the Department of Real Estate, School of Business of National University of Singapore.

A pioneer in the Philippine REIT market, AREIT was awarded Best Premier REIT and Most Innovative REIT Offering in the Philippines by International Finance Awards 2022 and received a two golden arrow award from the Institute of Corporate Directors based on the 2021 ASEAN Corporate Governance Scorecard.

AREIT became the first Philippine REIT included in the FTSE EPRA Nareit Asia ex-Japan REITs 10% capped Index in 2021. It is a constituent of the MSCI Philippine Small Cap Index, the FTSE Small Cap Index and the Philippine Property Index.

AREIT was also regarded as the Most Outstanding IPO in the Philippines by Asia Money, the Best IPO by The Asset, and the Southeast Asia Deal of the Year by Finance Asia in 2021.

AREIT Head of Investor Relations Mike Garcia and President and CEO Carol Mills receive the Best Premier Real Estate Investment Trust Award from Chandon Phanouvong, Commercial Counsellor of Laos Embassy in Thailand, at the awarding ceremony at the Waldorf Astoria in Bangkok, Thailand.

“We are both pleased and honored to receive these prestigious, international awards and market indices as they recognize our passion to grow the REIT space in the Philippines and promote inclusiveness in real estate investing,” AREIT President and CEO Carol T. Mills said.

Such awards are also a testament to the continued strength of AREIT’s properties despite the challenges in recent years. And its portfolio will be further bolstered as it continues to expand its office, retail, and hotel properties as well as explore other segments in the real estate market.

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