AREIT Inc. expects to keep its occupancy rate at 97 percent despite the challenging office space environment.
Carol Mills, AREIT president, said the real estate investment trust’s (REIT) diversified asset base cushions 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 added.
“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,” she added.
Mills said AREIT’s growing portfolio cushions the company from the challenges in the real estate industry.
In March, the company signed the deed of exchange with mother company Ayala Land I nc. and sister companies Greenhaven Property Ventures Inc., Cebu Insular Hotel Co. Inc. and 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 Securities and Exchange Commission’s approval.
“The application is currently being reviewed, and we are hoping to get approval in the next quarter,” she said.
AREIT closed 2023 with profits of P4.93 billion, up 43 percent from P3.44 billion the prior year. Revenues reached P7.14 billion, 41 percent up from P5.06 billion.
