AREIT's profit jumps 49% to P7.4 billion

AREIT Inc., the real estate investment trust (REIT) of property developer Ayala Land Inc. (ALI), posted a net income of P7.4 billion in 2024, up 49 percent from the previous year, according to a report by Manila Times.

"AREIT's performance for the year was boosted by contributions of its 2024 acquisitions, namely [the] Ayala Triangle Gardens Tower 2 office building, Greenbelt 3 and 5 mall, Holiday Inn Hotel & Suites Makati, Seda Ayala Center Cebu and industrial land in Zambales, and the full-year contributions of 2023 acquired assets," the company told the stock exchange on Friday.

AREIT's board of directors earlier approved the acquisition of commercial properties located in Cebu, Davao and Cagayan de Oro from its sponsor ALI and its subsidiaries Accendo Commercial Corp., Cagayan de Oro Gateway Corp. and Central Bloc Hotel Ventures Inc. via a property-for-share swap.

The transaction involves the exchange of eight properties owned by ALI and its subsidiaries, valued at P20.99 billion, for 505,890,177 primary common shares of AREIT.

The swap will have to be approved by AREIT shareholders at their annual stockholders' meeting on April 24, as well as by pertinent regulatory bodies.

"The acquisition is in line with our growth target of P15-P20 billion in [asset under management] per year. This will further diversify the portfolio and deepen AREIT's presence in the fast-growing regional cities in Visayas and Mindanao," AREIT President and CEO Jose Eduardo Quimpo II said.

DragonFi Securities Inc. equity research analyst Franco Fernandez told The Manila Times that "AREIT's property-for-share swap with ALI is a strategic move that reinforces its growth trajectory."

Fernandez added that the transaction would further solidify AREIT's position as a leading REIT in the Philippines with the addition of the eight properties to its portfolio.

"This aligns with its strategy of growing assets under management while sustaining a steady income stream for investors," he added.

However, Fernandez noted that the deal would "likely dilute existing shareholders" due to the issuance of new shares, but added that the transaction was also expected to be dividend-accretive "as the infused properties should contribute positively to earnings and dividend growth over time."

"Notably, this transaction also supports AREIT's efforts to diversify beyond office assets, a key consideration given evolving market trends," he said.

As of Nov. 28, 2024, AREIT's portfolio consisted of 26 commercial properties and two industrial land properties with assets under management (AUM) at P117 billion.

Post-infusion, AREIT's new assets will add 306,000 square meters (sqm) of building gross leasable area (GLA), resulting in a total GLA of 4.2 million sqm. AUM will increase to P138 billion.

"The acquisition will be accretive to shareholders of AREIT in line with our commitment of delivering returns and long-term value," Quimpo said.

AREIT shares were unchanged at P39.05 apiece on Friday.