AREIT’s P45-B expansion may include diversifying to malls

AREIT Inc., the real estate investment trust sponsored by Ayala Land Inc., is planning to diversify into shopping malls as part of its target to acquire assets worth a total of P30 billion to P45 billion over the next three years.

In a disclosure to the Philippine Stock Exchange, the firm said it plans to continue to grow its portfolio of assets at an average of 100,000 square meters of gross leasable area (GLA) every year from 2023 to 2025.

AREIT said this will increase its assets under management at approximately P10 billion to P15 billion annually.

The firm said it aims to maintain its leadership in the Philippine REIT sector in terms of asset size and market capitalization.

In 2020, AREIT set a growth target to double its Assets Under Management (AUM) from P30 billion to P60 billion two years from its initial public offering.

To date, the company has P53 billion in AUM and post infusion of the Cebu assets via property for shares swap, it is projected to increase its portfolio to 673 thousand square meters and reach P64 billion upon approval of the asset for shares swap by the Securities & Exchange Commission.

Aside from expanding its GLA, AREIT also plans to grow and diversify its asset portfolio in terms of sector, location and income contribution, funded through leverage and equity.

“The company will continue to demonstrate yield accretive acquisitions and ensure borrowings are within the aggregate maximum leverage limit of 35 percent of deposited property value,” AREIT said.

It will continue to expand its portfolio of quality commercial assets, but will also diversify into other asset classes, such as shopping malls, given the recovery and reopening of the economy.

While AREIT’s principal investment strategy is to focus on the resilient office sector, the firm said it “will consider acquiring freehold and other asset classes such as the malls, logistics and industrial properties to diversify investor risk.”

AREIT said all potential properties for acquisition will be a combination of properties and assets owned by ALI and third parties.

Overall, AREIT intends to fund future acquisitions through a combination of debt and equity. At current gearing ratio of 6 percent of deposited property value, AREIT has the opportunity to borrow up to 35 percent of its deposited property value and further demonstrate yield accretive acquisitions.

The company is looking at a combination of debt and equity funding in the next three years and optimize the leverage limit of up to 30 percent of deposited property value, subject to market conditions as it further increases its asset portfolio.

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The article was originally published in Manila Bulletin and written by James A. Loyola.