AREIT Inc., Ayala group’s real estate investment trust (REIT) arm, is ramping up its diversification into tourism after completing the takeover of Seda Lio hotel in El Nido, Palawan.
AREIT bought the resort from sponsor Ayala Land Inc. via a P1.2-billion cash transaction.
Seda Lio, which has 153 rooms, caters to leisure tourists, families, social and corporate events.
AREIT will earn a guaranteed building lease from the hotel operator, Econorth Resort Ventures, over the next 25 years beginning January 2024.
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“The acquisition of Seda Lio, alongside the planned asset infusions in 2024, will not only enlarge and expand AREIT’s footprint but also diversify its assets and reduce concentration risk,” says Carol Mills, president and CEO of AREIT.
Bulking up
Concentration risk refers to a company’s exposure to any single sector. Reducing this risk and having a more diversified asset base will help the firm weather downturns in specific business segments.
“Altogether, this will grow AREIT’s assets under management from P87 to P117 billion, quadruple the company’s size when it first listed in August 2020,” Mills says in a regulatory filing.
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AREIT previously announced the planned infusion of Ayala Land projects worth nearly P22 billion.
These include Ayala Triangle Gardens Tower 2, luxury mall Greenbelt wings 3 and 5 and Holiday Inn and Suites in Makati, as well as Seda Hotel at Ayala Center Cebu. It is also taking over a 276-hectare industrial land in Zambales.