AREIT profits rise with asset expansion

AREIT Inc., the pioneering Real Estate Investment Trust (REIT) in the Philippines, reported a 49 percent jump in net income to P1.49 billion in the first nine months of 2021.

In a disclosure to the Philippine Stock Exchange, the firm said this figure excludes fair value gain and one-time reversal of deferred tax due to change to fair value accounting.

AREIT sustained its growth momentum in the first nine months of 2021, posting revenues of P2.12 billion, 46 percent higher year on year.

Stable rental escalations and the contribution of the new properties such as The 30th, Teleperformance Cebu, and land parcels in Laguna Technopark boosted revenues.

AREIT’s consistent and solid operations in the third quarter resulted in average occupancy of 99 percent and rental collection of 96 percent.

The firm said it ended the period with a net gearing of 0.12:1, reflecting sufficient headroom and balance sheet strength to support its growth plans in the subsequent period.

In October, the company filed the registration statement and preliminary prospectus with the Securities and Exchange Commission for its maiden bond offering, to be listed and issued within the fourth quarter of 2021.

This offering is the initial tranche under its debt securities program of up to P15.0 billion. In line with this, the company obtained a new issuer rating of PRS Aaa from PhilRatings.

AREIT will be using the net proceeds to primarily refinance its existing debt and lock-in a fixed, low rate in the next two years.

Italso secured the approval of the Securities and Exchange Commission (SEC) on the subscription of Ayala Land, Inc. (ALI) and its subsidiaries, Westview Commercial Ventures Corp. and Glensworth Development, Inc., to 483.25 million shares of AREIT in exchange for its identified properties, according to the Deed of Exchange dated June 8, 2021.

The recognition of income from the new assets accrued beginning Oct. 1, 2021 and expanded AREIT’s gross leasable area (GLA) to 549 thousand sq. meters.

As of October, AREIT has disbursed P1.30 in total dividends per share, representing approximately 91 percent of its distributable income for the first three quarters of 2021.

The share price has increased more than 60 percent since the start of the year and reached an all-time high of P49.50 last Nov. 4, 2021.

AREIT’s market capitalization as of this writing is P67 billion and, at the current share price, total shareholder return is 73 percent since its IPO.

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Article was originally published in Manila Bulletin and written by James A. Loyola.