INTERVIEW
As the Philippines ’ first listed-REIT , what is your outlook of the Philippine REIT market in 2021 , especially in the face of disruptions brought about by the global health crisis ?
As the first Philippine REIT , AREIT was off to a good start . Its IPO in August 2020 was two times subscribed , and albeit technical glitches in the first 2-3 trading days , prices quickly stabilised amidst a sluggish market . By November , it quickly rebounded back to its IPO price and as of this writing , AREIT ’ s price has increased 18-20 %. With dividends distributed quarterly , total shareholder return is over 20 % from its IPO level , higher than its target of 10-12 %.
AREIT has shown resilience throughout the pandemic given its stability in income . It has also demonstrated its capacity to grow via leverage , having acquired two new assets within five months from listing . This has increased AREIT ’ s incomegenerating portfolio from 170 to 340 thousand square meters . Of this , 98,000 square meters is land that is leased and directly contributing to income .
In the face of economic disruptions and uncertainty , AREIT is an investment option that provides a good balance between dividend yield and growth . Ayala Land has always viewed REITs positively and pursued its intent to launch a REIT prior to the pandemic , open its commercial investments to the public and regenerate capital to fuel further expansion of its commercial leasing portfolio . another 10 years . These will be favourable for REITs like AREIT with office buildings that have the PEZA ( Philippines Economic Zone Authority ) accreditation for BPOs .
Where are the bright spots in the Philippine property market for 2021 ?
The Philippine office sector is in a unique situation compared to other markets because of the large presence of BPO companies that are considered critical and essential in performing global services . Many functions of multinational companies including customer service , IT support , accounting , insurance , healthcare , banking etc . are being served from the Philippines amidst the pandemic . It is also one of the largest contributors to Philippine employment and a major driver of its GDP .
Thus , office properties are seen to be most ideal to REIT , particularly those that are in prime locations that have access to a strong talent pool for BPOs . AREIT ’ s buildings are leased to large , stable , quality tenants who have been in operations in the Philippines .
Apart from office properties , the industrial sector also remains
Solaris One Building
Are there any economic developments , government policies or market sentiment changes that are seen to be crucial in the further expansion of the REIT market in the Philippines ?
The Philippines ’ macroeconomic indicators are currently favourable for the REIT market in the Philippines . Interest rates continue to stay low which is favourable for investments including expansion plans for REITs . At the same time , the low interest rates make these very attractive to investors .
Meanwhile , if inflation increases at managed levels , REITs act as an inflation-hedged instrument due to its long-term contracted escalations . The market is now seeing how REITs , if structured properly and if built on sound fundamentals , can actually be a safe haven during times of uncertainty .
Recently , the proposed tax bill lowering the tax rates for Philippine corporations is viewed positively as a support to businesses and particularly for our BPO ( Business Process Outsourcing ) tenants which will continue their tax incentives for
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