AREIT Buys a Grade-A BPO Building in Cebu

Ayala Land-sponsored AREIT, the first real estate investment trust (REIT) in the country, has recently acquired Teleperformance Cebu, expanding its portfolio of prime assets, the Business World reported.

For P1.45 billion, AREIT bought the 12-story commercial building from Ayala Land Inc. subsidiary ALO Prime Realty Corp, initially paying P290 million in the signing of the deed of sale. It will settle the remaining P1.16 billion once the transfer of the building’s Philippine Economic Zone Authority (PEZA) registration is complete. The funds were proceeds from AREIT’s P12-billion public offering last August.

The Ayala-Land sponsored REIT will pay the quarterly dividends beginning this September. The payout should be at least 90 percent of its income.

Prime Assets

Located in Cebu IT Park, Teleperformance Cebu has a total gross leasable area of 18,092 square meters (sqm), with 100 percent occupancy level. The building is Grade-A, PEZA-accredited, and a LEED Gold Certified Business Process Outsourcing (BPO) development.

With the latest acquisition, AREIT’s asset brings its portfolio to a gross leasable area of 172,000 sqm. Before the transaction, AREIT had around 153,000 sqm of prime real estate assets, three properties located in Makati City. 

Ayala North Exchange, situated along Ayala Avenue at the corners of Amorsolo and Salcedo Streets, has a two-tower office facility with a combined gross leasable area of around 56,000 sqm. Aside from housing multinational companies and BPO firms, the property features a retail podium and a hotel.

Solaris One, meanwhile, sits along Dela Rosa Street in the central business district. It has 24 floors with a gross leasable space of 46,626.57 sqm. Designed for BPO companies as well, the building features large floor plates stretching 2,800 sqm per floor.

The third property is the McKinley Exchange. Located at the corner of EDSA and McKinley Road in Makati City, it has direct access to key transportation systems, such as train stations, as well as bus and jeepney stops. Fitted with technology, the office suits the requirements of BPOs.

Pandemic Recovery

Industry experts are optimistic that REITs can help jumpstart recovery from the economic blow of the coronavirus crisis. In this Philstar report, property consultancy firm JLL Philippines said that REITs offer a “cheap funding source” for real estate developers, generating capital for initiatives, thereby rebooting construction activities and creating job opportunities.

They added that the office segment proves most promising because of its resilient rental growth rates.

Colliers International Philippines likewise believes that REITs can contribute to the industry’s recovery next year, as it can attract national and local developers. Offering advice to real estate players, they urge building integrated communities outside the capital region and improving old assets, such as offices and warehouses.

When AREIT made its debut, Finance Secretary Carlos G. Dominguez III said that the milestone shows the readiness of the local market in getting back to business in the midst of the crisis, as reported in Manila Bulletin.

Noting that REIT sponsors would reinvest capital and profits to the property and infrastructure development industries, Dominguez mentioned that the investment has multiplier effects on the economy. He hopes to see more companies forming REITs to give Filipinos more promising, reliable investment opportunities.

Overseas Filipino workers (OFWs) and middle-class families are expected to benefit from the investment trust since even small investors can take part in the industry. Property consultancy firm Santos Knight Frank (SKF) said that this can help “democratize” the country’s real estate market, as mentioned in this Business Mirror report.

More REITs

Last month, the Securities and Exchange Commission (SEC) disclosed that three more real estate companies are eyeing to list their own REITs. Although the agency didn’t disclose the names, Double Dragon has already expressed interest in listing seven properties in the first tranche of its REIT listing, as Manila Times reported back in July. 

The asset will have a total area of 248,349 square meters. 

With an estimated value of P50.89 billion, the DD Meridian Park REIT (DDMP REIT) is set to generate P16.97 billion. The real estate giant plans to introduce the investment trust in the fourth quarter of 2020. 

Proceeds from the public offering will be used to build 450,000 sqm of the building floor area, increasing its leasable space. After two or three years, DDMP REIT will add two more buildings in its portfolio.

Earlier reports mentioned Vista Land and Megaworld monitoring the REIT market as well, as plans to join in the new industry brew.

Sources: Business World, Philstar, Colliers International, Manila Bulletin, Business Mirror, Manila Times

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