What are the most significant cases or transactions that your legal team has recently been involved in?

One of the most significant achievements recently has been the launch and listing of AREIT. The Philippines has had a REIT law in place since 2009. However, with gaps in regulations, it has only taken off once Ayala Land pushed for reform and launched AREIT in 2020, despite the uncertainties brought about by the Covid-19 pandemic. AREIT reshaped the capital market landscape of the Philippines, created an investment vehicle for local investors, and provided Ayala Land with the opportunity to recycle capital in the local real estate market. Today, AREIT is the only REIT in the country trading above the IPO price, expanding its Assets Under Management (AUM) from PhP30bn to PhP87bn, growing its dividends per share by 86%, and generating a total shareholders’ return (TSR) of 52% as of the end of 2022 from its listing.

Why are in-house lawyers well-placed to drive change in their organisations?

The role of in-house counsel shifted from pure enforcers of legal, regulatory, and compliance requirements to integral business partners. At Ayala Land and AREIT, the legal team is heavily involved in the whole process, from planning and implementation to the post-execution stage. Lawyers contribute to the strategy with an interdisciplinary point of view, considering the financial, operational, and regulatory implications, including how to market and communicate a project or business decision to stakeholders. The lawyers also play a crucial role as drivers of corporate governance, leading change and directing policies to help shape organisational behaviour, including diligently monitoring changes in laws and regulations that open opportunities for business growth. Taking advantage of regulatory developments was crucial in launching AREIT, listing it, and growing it exponentially in its first three years of operations. The legal team contributed to maximising what various taxation laws, securities regulations, and regulatory requirements provide to enable AREIT to grow timely, efficiently, and cost-effectively.

Can you talk about you or your company’s efforts on renewability, sustainability, or other environmentally friendly activities?

Aligned with its sponsor, Ayala Land’s thrust of monitoring essential issues such as the economic, environmental, and social impacts of its developments, AREIT adopts Ayala Land’s ESG approach of operationalising sustainability through the four focus areas and measuring and reporting its sustainability performance against global goals and standards. As a real estate company, Ayala Land’s sustainability four focus areas are site resilience, pedestrian mobility and transit connectivity, resource efficiency, and local economic development.

Site resilience reduces the vulnerability of communities to the effects of climate change and natural disasters. Pedestrian mobility and transit connectivity improve urban mobility. Resource efficiency addresses the continuing loss of natural resources and optimising the use of natural resources. Local economic development seeks to alleviate socioeconomic imbalances identified in a 2014 materiality assessment; the four focus areas remain relevant today, together with the issues emerging from the Covid-19 pandemic. The four areas frame the push for sustainability within the Ayala Land Group and AREIT as general guides to the organisation’s operations, mitigating sustainability risks and providing value to the business, environment, and society.

AREIT emphasises resource efficiency and local economic development. The construction, development, and master planning of AREIT properties are undertaken by its sponsor. Upon turnover of the properties, either through acquisition or infusion, AREIT and its property management arm, AREIT Property Managers (APMI), assume responsibility for the properties’ operations and maintenance, ensuring alignment with Ayala Land’s sustainability initiatives and targets. APMI, in turn, contracts Ayala Property Management Corporation (APMC) concerning the management of the properties’ physical buildings, equipment, and common area services.

AREIT uses key sustainability reporting frameworks such as the UN Sustainable Development Goals (SDGs), six capitals of the Integrated Reporting Framework, Global Reporting Initiative (GRI) Indicators, Sustainability Accounting Standards Board (SASB) Material Topics, and Task Force on Climate-Related Financial Disclosures (TCFD) recommendation to measure and report its performance and impact on local and global development.

To address climate change challenges, Ayala Land, the Sponsor of AREIT, has implemented various measures to strengthen the resilience of their properties. These include undertaking technical due diligence to screen for geohazards, providing space for refuge and rainwater absorption, and promoting the use of native trees to enhance biodiversity and ecosystems. AREIT properties are located in the master-planned Ayala Land estates, ensuring mobility and connectivity. In these estates, people are provided alternatives to using motor vehicles and abundant opportunities for walking and commuting. There are also numerous walkways, pedestrian-only areas, and convenient access to transit stops and transportation terminals in these places.

AREIT is committed to supporting its sponsor’s goal of reaching the carbon emission reduction target of 2030 and the Ayala Group’s Net Zero commitment by 2050. Ayala Land’s operations and developments are planned so that natural resources and construction materials, such as steel and cement, are used judiciously and efficiently, reducing overall consumption and GHG emissions. Energy and water conservation programs and waste management schemes are also in place and are regularly audited for further improvement. Lastly, REIT’s properties cater to office and retail tenants that generate employment and business opportunities in their localities. By providing spaces to these tenants, AREIT contributes to nation-building and creates value for the community.