AREIT to accelerate expansion as retail, hospitality sectors recover

By Jenniffer B. Austria

AREIT Inc., the real estate investment trust company of Ayala Land Inc., is ready to further expand and diversify its portfolio as the retail and hospitality sectors start to recover.

AREIT president Carol Mills said during the company’s annual stockholders meeting the group’s strategy is to seek out opportunities for office properties and complement them with hotel and retail components.

“As we enter 2023 with a track record of delivering solid performance and growth, AREIT is ready to accelerate expansion and diversify its portfolio,” Mills said.

“With the pandemic behind us, we see a strong rebound in commercial businesses, particularly retail establishments. This improvement provides an opportunity to expand and balance AREIT’s portfolio, in line with its prospectus when we listed it as a commercial REIT,” she said.

AREIT is undertaking P22.5 billion worth of asset infusion which would increase total assets to P87 billion and portfolio to 23 properties.

The infusion which involves prime flagship assets from ALI office and malls would enable AREIT to achieve its three-year investment plan of P90 billion in assets under management.

The proposed assets to be acquired by AREIT include One Ayala Avenue at the corner of Edsa and Ayala Ave. with 71,000 square meters of office space, the newly-redeveloped Glorietta 1 and 2 mall and office buildings and Ayala Mall Marquee in Angeles City, Pampanga. ALI’s crown jewel—Glorietta 1 and

2—is home to essential local and foreign retail brands and well-established F&B offerings. It also has two office buildings on top of the mall, while MarQuee Mall has consistently been one of the group’s top-performing provincial malls, pre- and post-pandemic.

AREIT’s portfolio is composed primarily of offices, with high occupancy of 98 percent. It said about 88 percent of expired office leases were renewed, and all 7,000 sq. m. of pre-terminated leases in 2022 were replaced.

ENEX pursuing 1,100-MW gas turbine plant without ACEN’s financial backing

By Alena Mae S. Flores

ENEX Energy Corp., together with its joint venture partner, is “in very advanced stages of development” of the P60-billion, 1,100-megawatt combined-cycle gas turbine power plant in Batangas City.

ENEX and US-based Blackstone Inc. portfolio company Gen X Energy LLC are jointly developing Batangas Clean Energy Inc., the project company of the natural gas power plant.

“That’s in very advanced stages of development, and we believe it can participate in the upcoming CSP [competitive selection process] of Meralco [Manila Electric Co.] for instance,” ENEX chairman Eric Francia said.

THE standards for bank lending were broadly unchanged in the first quarter of 2023, results of the latest Senior Bank Loan Officers’ Survey conducted by the Bangko Sentral ng Pilipinas showed.

A larger percentage of bank respondents maintained their overall credit standards for business and household loans based on the modal approach. Meanwhile, the diffusion index method showed a net tightening of lending standards to firms and a net easing of lending standards for households.

Modal-based results showed that a higher number of respondent banks (73.3 percent) had unchanged credit standards for enterprises in the first quarter. The diffusion index approach showed a net tightening of overall credit standards across all borrower firm sizes with several reasons cited by the surveyed banks. These are the deterioration in the profitability and liquidity of banks’ portfolios, less desirable borrowers’ profiles, uncertain economic outlook and a lower risk tolerance. Both modal and diffusion index approaches indicated that banks anticipate generally steady loan standards for the next quarter because of stable economic outlook, broadly steady risk tolerance and stable profile of borrowers. Julito G. Rada

By Darwin G. Amojelar

SUSTAINABLE STARTUPS. Department of Trade and Industry Secretary Alfredo Pascual underscores the vital role of public and private partnerships in encouraging investments toward building resilient and sustainable tech-startups during the launch of SCALE program. SCALE is a mutual endeavor of DTI, the Management Association of the Philippines, PricewaterhouseCoopers, Foxmont Capital Partners and IdeaSpace Foundation in building collaborative programs to strengthen tech businesses to be scalable enough to reach the global market.

Francia said, however, that while ENEX’s parent company ACEN was supporting the joint venture company, “ACEN has already committed to only invest in 100-percent RE [renewable energy].”

“I just want to make it clear that it is not the intent of ACEN to invest in the construction equity of a gas-fired power plant because we already committed to become 100-percent RE generation by 2025,” Francia said.

“What it means is that ENEX will have to source, together with its partner, for the capital once the project gets to financial close,” he said.

Francia said the BCE project is not yet in financial closing, and it is looking to win a long-term contract given the volatility of fuel prices.

“It is very risky to invest in a merchant, uncontracted gas power plant. It would need a contract with a reasonable pass-through mechanism and so forth,” Francia said.

“We would like nevertheless for the project to succeed. We will exert all efforts to make sure the project gets fully-funded and that would be the role of ENEX to play and we have various options,” he said.

1,200-MW Sual coal plant resumes operations after weekend maintenance shutdown

THE Department of Energy said Monday the 1,200 megawatt Sual coal-fired power plant is now back in operation after undergoing maintenance shutdown over the weekend. It said the Sual coal plant underwent maintenance from April 29 to May 1 to conduct repairs.

“Concerns with Sual units 1 and 2 were resolved and both are operating as planned. Sual unit 2 is fully operational, while unit 1 is maintained [at] max level of 580 MW until further repair and maintenance activities are done by June or July,” Energy assistant secretary Mario Marasigan said.

The grid operator did not place the Luzon grid on red or yellow alert despite the maintenance shutdown because of low demand over the weekend.

The Sual plant had to resolve the buildup of a leak from the boiler tube and clean the generator stator lot bar to rectify the increase in temperature.

Energy officials said, however, that if they allowed plant to conduct the maintenance for seven-days on May 5 to 11 as requested, it would result in a possible yellow alert, or worst, red alert on Week 18 (May 1 to 7) and Week 19 (May 8 to 14). This was agreed during the assessment meeting among the DOE team, National Grid Corp. of the Philippines and TeaM Sual Corp. on April 25.

The DOE received a notice from the TSC on April 24 requesting to undergo unplanned maintenance of its Sual Unit 1 on May 5 to 11.

The DOE also asked for the public’s cooperation by rationalizing the use of power during the peak demand hours of 11:00 a.m. to 12 noon, 2 p.m. to 3 p.m. and 6 p.m. to 7 p.m. to mitigate the impact of the maintenance shutdown.

It encouraged all offices and residences using air conditioners to set their thermostat at 25 degrees Celsius during these times. Alena Mae S. Flores

THE Philippine E-Commerce Association said it expects to see a sustained growth this year as more Filipinos turn to online shopping.

PECA president Jere Von Basa told reporters the e-commerce industry in the Philippines would continue to grow faster this year and beyond.

“Right now, we have about eight million online sellers in the Philippines, and based on the DTI [Department of Trade and Industry] data, the industry’s monthly sales range between P2 billion and P3 billion,” Basa said.

“The growing trend of e-commerce in the Philippines has brought good news to many establishments, as well as more challenges, primarily on security and fraud,” he said.

Basa said inadequate access to finance remained a major obstacle for micro, small and medium enterprises, particularly online sellers.

Data from the DTI showed that 99.5 percent of companies in the Philippines were MSMEs as of last year.

“These are just among the top concerns PECA would like to address as it sees that e-commerce in the country will continue to prosper in the coming years,” Basa said.

The Philippine Statistics Authority earlier reported that the country’s digital economy amounted to P2.08 trillion, contributing 9.4 percent to the gross domestic product in 2022. The amount represented an increase of 11 percent from P1.87 trillion in 2021.

The digital economy is composed of digital transactions covering digitalenabling infrastructure, e-commerce and digital media/content.