AREIT Inc., pioneering real estate investment trust sponsored by Ayala Land Inc., is planning to raise P3 billion from the issuance of fixed-rate bonds as the initial tranche of its proposed Debt Securities Program of up to P15.0 billion.
The firm intends to use the net proceeds from the bond offering for its capital expenditures, refinancing and general corporate purposes.
Philippine Rating Services Corporation (PhilRatings) assigned the highest Issue Credit Rating of PRS Aaa, with a Stable Outlook, for AREIT’s proposed issuance of up to P3.0 billion in Fixed-rate Bonds.
Obligations rated PRS Aaa are of the highest quality with minimal credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong.
On the other hand, a Stable Outlook is assigned when a rating is likely to be maintained in the next 12 months.
PhilRatings also assigned an Issuer Credit Rating of PRS Aaa (corp.), with a Stable Outlook, to AREIT. An Issuer Credit Rating is an opinion on the general and overall creditworthiness of the issuer, evaluating its ability to meet all its financial obligations within a time horizon of one year.
A company rated PRS Aaa (corp.) has a very strong capacity to meet its financial commitments relative to that of other Philippine corporates.
PhilRating said the ratings and the corresponding outlook assigned took into account the AREIT’s competitive property portfolio characterized by high occupancy and stable tenancy from high-quality locators.
It also considered AREIT’s “well-qualified and experienced management team, coupled with solid support from a strong Sponsor; sustained profitability given pandemic-resilient operations and continued portfolio expansion; and conservative capital structure.” As of end-September 2021, AREIT’s portfolio was comprised of five Grade A, Philippine Economic Zone Authority (PEZA)-accredited commercial developments and four parcels of land located in a PEZA-accredited industrial park.
These properties enjoy very high occupancy rates, with all of them being fully or almost fully occupied despite the COVID-19 pandemic. Major tenants of these properties include top multinational and local corporations.
As disclosed by the Company, there are minimal lease expiries until 2023, suggesting stable tenancy from these high-credit grade locators until the maturity of the proposed bonds.
AREIT has obtained the Securities and Exchange Commission’s (SEC) approval for its property-for-share swap transaction with ALI and its subsidiaries which involves the infusion into AREIT of high-quality commercial properties that will expand the Company’s total gross leasable area (GLA) from around 344,000 sqm to 549,000 sqm and increase its assets under management to P52 billion.
The recognition of income from the new assets will accrue to AREIT beginning October 1, 2021.