- The quarter’s commercial management enabled the retention of contracts for more than 15,000 m2 and the leasing of approximately 25,000 m2 across the different categories.
- The portfolio’s physical vacancy decreased to 7.3%, the lowest recorded during the year, thanks to space placements across all categories during the quarter.
- Foot traffic at the portfolio’s assets continues to grow, with the retail category standing out, reaching 90% of traffic compared to measurements from the same period in 2019.
- So far this year, the business’s operating margins — NOI margin and EBITDA margin — have recovered to pre-pandemic levels of 82% and 63%, respectively.
- The Distributable Cash Flow for the third quarter of the year is COP 65,056 MM, or COP 150,795 per Security.
- The estimated Dividend Yield for 2021 will be close to 4.8% calculated at the Security’s net asset value, and around 6.0% if calculated using the Security’s market price.
Bogotá, November 2021 — Pei Asset Management, Pei’s Real Estate Manager, presented the vehicle’s key indicators and management highlights during the investor teleconference for the third quarter of 2021.
The vehicle’s commercial activity this year has allowed for the renewal of more than 62,000 m2 during the first nine months of the year. Regarding new lease contracts, approximately 25,000 m2 were leased in the third quarter, including: warehouses at logistics assets, Class-A corporate offices with tenants from the technology sector, and retail units in shopping centers for supermarket operations, healthcare centers, restaurants, and retail trade.
Likewise, physical vacancy across the portfolio’s various categories has decreased by a cumulative 500 basis points compared to the first quarter of the year.
Physical vacancy in the corporate category decreased by 10 basis points during the third quarter of 2021, thanks to new tenants, notably the releasing of more than 3,000 m2 of space in the premium office segment under long-term contracts.
In the commercial category, it fell from 9.4% to 8.8% thanks to placements at the Atlantis and Plaza Central shopping centers and several retail units at Único-brand properties. In the logistics and industrial category, this indicator stood at 3% following the addition of new tenants at the Yumbo warehouse and at the Cittium Industrial and Logistics Park. As for the specialized category, vacancy decreased by 790 basis points to 12%, thanks to a 2,000 m2 increase in leasing at CityU.
Meanwhile, the portfolio’s economic vacancy closed September at 12.2%, down 90 basis points from the close of the prior quarter, also reaching its lowest level since February 2021.
During the period, the corporate and commercial categories recorded growth in asset foot traffic, measured by occupant numbers, compared to the prior quarter’s levels. In addition to readings above 90% of pre-pandemic traffic in the commercial category, the specialized category stood out with a 72% reading, an indicator driven by the return to in-person classes at some universities.
Regarding receivables levels, net receivables decreased 71% compared to the third quarter of 2020, closing the September cutoff at 9,536 million pesos. The execution of a payment agreement with Alfacer in the logistics category, collection management, and compliance with deferred payments in the commercial category were the main drivers of this result.
DISTRIBUTABLE CASH FLOW
The Distributable Cash Flow (DCF) payment for the third quarter of the year, worth 150,795 pesos per Security, will be made on November 16. In 2021, the DCF received by investors totals COP 226,262 MM, or 524,457 per Security. This marks five consecutive quarters in which the vehicle has generated a DCF above COP 50,000 MM.
The estimated Dividend Yield for 2021 will be close to 4.8% calculated at the Security’s net asset value, and around 6.0% if calculated using the Security’s market price.
Meanwhile, year-to-date returns at the close of the third quarter stood at 6.3%, above total returns for 2020, reflecting a growing recovery throughout 2021 and capturing the rebound in the CPI indicator; this trend should continue to consolidate in the coming months. The stabilized return over the 10-year investment horizon was 10.9% as of the September cutoff.
So far this year, net asset value has appreciated 1.12% compared to the close of 2020, driven by the CPI correction since April and an operating result of 140 thousand million pesos, which enabled cash distributions of COP 161,000 million paid during the year.
As of the close of September 2021, 87% of the portfolio, equivalent to COP 6.1 Bn, had updated appraisals. Among the 13% of commercial appraisals to be recorded in the last quarter of the year are some commercial assets in cities outside Bogotá and corporate assets.
PORTFOLIO
At the end of September, the acquisition of the Sanitas Toberín medical center, located in Bogotá, was formalized, strengthening the healthcare asset portfolio through Pei’s partnership with Grupo Keralty. To date, Pei has 4 Sanitas healthcare assets totaling 15,911 m2 and representing a value of 113,760 million pesos.
As a result, at the end of the third quarter the portfolio holds assets under management totaling 7.5 trillion pesos and leasable area of one million one hundred three thousand square meters.
In December, Pei plans to formalize the acquisition of two assets: the first, the north tower of the RIVANA corporate building in Medellín, which will be Tigo Une’s headquarters. This long-term lease will also feature an innovative operating scheme that includes value-added services such as space fit-out and furniture, as well as the provision of services such as cleaning,
pantry supplies, waste management, reception, space management, and physical security, among others.
The second asset is the Calablanca Hotel in Barú, where Pei will hold a 60% ownership stake. The partners holding the remaining 40% are Grupo Argos, owner of the land, and Arquitectura y Concreto, the project’s developer and builder. The hotel’s opening to the public is planned for December, operated under the Sofitel brand of the Accor group. Pei has a preferred cash-flow period of up to 5 years
granted by the owner-partners.
CURRENT SECURITIES MARKET DYNAMICS
During the third quarter of 2021, trading activity in the Colombian securities market declined further: fixed-income transactions fell -26%, equity transactions fell -19%, while real-estate-backed securities saw a -67% reduction. For TEIS specifically, trading volumes fell 64%.
Nonetheless, Pei has been the most-traded security in the secondary real estate market, with year-to-date trading volume of 160,036 million pesos, representing 66% of all real estate securities listed on the BVC.
This lower-liquidity environment led the average market price during the third quarter to be 81%, ranging between 81% and 83%, driven mainly by low-value transactions. At the close of the quarter, the market-price valuation methodologies calculated by pricing providers, in effect since June 1 of this year, recorded average levels of 81% and 83% of NAV (Net Asset Value calculated by the Trustee
— Fiduciaria Corficolombiana).
Pei Asset Management has responded to market conditions with proactive actions, including:
• Open, ongoing communication with investors, promoting understanding of current market conditions and providing analytical tools for decision-making.
• Monitoring of the valuation methodologies mentioned above, giving us a better understanding of fluctuations in Security prices.
• Management and support of the process to migrate TEIS Securities to the Equities Market of the Colombia Stock Exchange
• Evaluation of the possibility, once the migration to the equities market is complete, of activating a liquidity-provider mechanism for the security, among other alternatives offered by this change in the TEIS trading environment on the Colombia Stock Exchange.
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Pei Asset Management, manager of real estate investment vehicles
Pei Asset Management is a company specialized in the structuring and comprehensive management of investment vehicles in Colombia. It has held the highest Portfolio Management Effectiveness rating, G-aaa, awarded by BRC Standard & Poor´s S&P Global since 2009.
For 14 years, Pei Asset Management has been characterized by its contribution to society’s well-being, democratizing investment opportunities, creating physical spaces that benefit the community, and driving the growth of its partners.
Its expert team works daily to build and maintain long-term relationships with investors, tenants, and other stakeholders.
Pei, the leading real estate investment vehicle for Colombians
Pei Asset Management currently manages the real estate asset portfolio of Pei, the leading real estate investment vehicle for Colombians, valued at COP 7.5 trillion; the portfolio comprises 148 properties representing more than 1.1 million m2 of leasable area, located in 30 cities and municipalities across the country.
The diversified vehicle, notable for its variety of asset types, geographic locations, and tenants, includes the following categories: corporate, logistics and industrial, commercial, specialized, and hospitality.
Pei offers a solid investment alternative with attractive returns and high liquidity, prioritizing the building of long-term relationships with its more than 4,600 investors and 2,000 tenants.