The Ayala Group’s real estate investment trust AREIT Inc. expressed confidence of being able to maintain its high occupancy rate of 97 percent despite excess supply in the office market which has resulted in a substantial vacancy rate in the industry.
During the firm’s annual stockholders’ meeting, AREIT President Carol Mills said their diversified asset base, which includes malls, hotels and industrial spaces, cushions the company from the challenges facing the office leasing market.
![AREIT President Carol Mills](https://realestateblogph.com/wp-content/uploads/2024/05/71545_cd0f0b2f45.png)
“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.
She noted that “we expect to maintain this as we only have less than 10 percent of our leases expiring this year.”
Mills also said that, while hybrid work continues even after the pandemic, a majority of work are now being done on-site 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.
Mills added that “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 its sponsor Ayala Land Inc. and sister companies Greenhaven Property Ventures Inc., (Greenhaven) Cebu Insular Hotel Co. Inc. (Cebu Insular) Buendia Christiana Holdings Corp. (BCHC) 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 asset-for-share swap to the Securities and Exchange Commission (SEC) for approval adding that, “The application is currently being reviewed, and we are hoping to get approval in the next quarter.”
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.
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The article was originally published in Manila Bulletin and written by James A. Loyola.
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