Assets Under Management AUM

Analysts expect higher AREIT returns

By Justine Irish D. Tabile

AREIT, Inc.’s additional swap shares approved along with higher interest rates should improve its dividend yield, analysts said.

“AREIT may be an attractive investment at this time due to its recorded building occupancy rate of 97%, rent collection rate of 98% and leases that are being contracted with an average lease expiration of nearly 6 years, posting higher rental across all of his properties,” Marc Kebinson L. Lood, Head of Online Trading at Timson Securities, Inc., said in a Viber message.

AREIT’s earnings should be stable based on its dividend yield which is expected to rise as interest rates rise, he added.

“Interest rate increases can imply that the economy is strong and doing well, and therefore companies benefit and pay significant dividends, especially for AREIT, whose tenants are mainly business process outsourcing ( BPO).”

He added “that AREIT would benefitIft a stronger dollar due to rising US interest rates.

Yields represent the dividend yield for the company’s shareholders, while dividends refer to the portion of a company’s quarterly profit allocated to investors.

Yields are expected to rise as the price of AREIT shares is expected to be lowered in the market as effect of rising rates, according to an analyst.

“Investing in AREIT is a hybrid of Iffixed income and equity; statutory dividend regularity can be expected, as well as capital appreciation driven by organic and inorganic growth at AREIT,” Mr. Lood said.

Regina Capital Development Corp. Sales Director Luis A. Limlingan said AREIT shareholders could expect “a sustained dividend declaration in the face of a volatile global stock market.”

“The share exchange agreement with Ayala Land will significantly improve AREIT’s GLA (gross leasable area) by just over half a million square meters (m²), giving the company an AUM ( assets under management) rather attractive of around 60 billion pesos,” Limlingan added.

AREIT revealed on Friday that the Philippine Stock Exchange has approved its request to list an additional 483.24 million shares of common stock to cover the company’s property-for-equity swap transaction with Ayala Land, Inc. (ALI).

The transaction will incorporate three Vertis North Commercial Development office buildings and a commercial podium located in Quezon City.

One and two Evotech buildings in Nuvali Santa Rosa, Bacolod Capitol Corporate Center in Laguna and Negros Occidental and Ayala Northpoint Technohub will also be infused.

The approved listing would also infuse office condominium units in BPI-Philam Life buildings in Makati Central Business District and Madrigal Business Park in Alabang.

AREIT’s GLA will then extend to 549,000 m². and its AUM at 53 billion pesos.

JThe exchange shares listed with the PSE on Thursday and are subject to a 180-day lock-up period with BPI Securities Corp. as fiduciary agent.

Year-over-year, the property-for-equity swap increased AREIT’s dividend per share by 13% in Iffirst half.

“The importance of REIT listing in a business is that the capital raised will be used to acquire more properties for higher dividends, which is something investors are looking for and a great addition to an investment portfolio,” said Mr. .Lood.

On Friday, AREIT closed 0.39% lower at P38.75 each, while its sponsor ALI closed unchanged at P27.80 each.