Exec: Areit can buck headwinds this year

AREIT Inc., the real estate investment trust sponsored by Ayala Land Inc., said it wants to maintain its occupancy rate at 97 percent, despite the challenging office space environment.

Company president Carol Mills said the company’s diversified asset base can cushion the company from the property leasing market’s headwinds.

“Currently, the office market is still challenged as vacancy remains high at 18 to 20 percent. But fortunately for Areit, our occupancy was strong at 97 percent last year because of our diversified asset base, and for offices alone, 93 percent occupancy, which is better than industry,” Mills said.

“We expect to maintain this as we only have less than 10 percent of our leases expiring this year,” she said.

Mills said that while hybrid work continues, majority of work are now being done onsite for most companies.

“We have seen higher pedestrian counts in our buildings compared to last year, and we expect hybrid work to continue,” she said.

“Business expansion has also driven many companies to retain office space, especially in the more prime and their more productive locations. In any case, our diversified mix with malls, hotels and industrial assets, complementing offices will certainly help mitigate vacancy risks.”

In March, the company signed the deed of exchange with mother company Ayala Land and sister companies Greenhaven Property Ventures Inc., Cebu Insular Hotel Co. Inc., Buendia Christiana Holdings Corp. for the transfer of P28.5 billion-worth of assets from the Ayala Land Group in exchange for 841.26 million Areit common shares, issued at P34 apiece.

The asset sale was initially announced in November last year covering the assets Ayala Triangle Gardens Tower 2, luxury mall Greenbelt 3 and 5 and Holiday Inn and Suites Makati at Ayala Center, Seda Ayala Center Cebu and a 276-hectare parcel of land located in Zambales.

Mills said Areit has already submitted the deal for the review of the Securities and Exchange Commission.

Areit closed 2023 with profit of P4.93 billion, up 43 percent from P3.44 billion the prior year.

Revenues reached P7.14 billion, up 41 percent from P5.06 billion in 2022.