{"id":322129,"date":"2023-03-11T13:09:57","date_gmt":"2023-03-11T05:09:57","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=322129"},"modified":"2024-09-01T22:39:12","modified_gmt":"2024-09-01T14:39:12","slug":"here-are-our-3-reit-top-picks","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/here-are-our-3-reit-top-picks\/","title":{"rendered":"Here are our 3 REIT top picks"},"content":{"rendered":"\n<p>Among the REITs in our coverage, our top pick is <strong>CREIT <\/strong>due to its unique positioning in the Philippine renewable energy sector, its long-term weighted average lease expiry (WALE) of 20.4 years, and potential income contribution from its solar generation expansion pipeline. <\/p>\n\n\n\n<p><strong>MREIT <\/strong>is our next top pick because of its diversified tenant base of BPO companies and its potential to add more than 1.0mn sqms of office GLA from its MEG\u2019s current portfolio. <\/p>\n\n\n\n<p>We also like <strong>AREIT <\/strong>due to its capacity to expand its office portfolio given Ayala Land, Inc.\u2019s (ALI) office GLA of ~686k sqms.<\/p>\n\n\n\n<div style=\"height:26px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Analysis and Recommendation<\/h2>\n\n\n\n<p><strong>REIT re-rating may take longer than expected\u2026<\/strong><\/p>\n\n\n\n<p>Overall REIT prices fell by 7-30% in 2022 as the rise in interest rates resulting from the BSP\u2019s series of policy rate hikes beginning May 2022 encouraged a mass switch of investment funds towards interest-earning financial instruments and away from equities, including REITs. We expect the BSP to extend its rate hike cycle after January 2023 inflation accelerated to 8.7%, disappointing most economists\u2019 expectations that inflation would already slow that month and dampening hopes of some form of monetary loosening this year. In turn, a recovery in REIT prices hinging on an outlook of flat or downtrending interest rates may take longer to happen than originally expected.<\/p>\n\n\n\n<p><strong>\u2026 but dividend growth prospects remain intact&#8230;<\/strong><\/p>\n\n\n\n<p>We project the sector\u2019s aggregate core net income to grow 15%\/4% to Php17.0 billion\/Php17.6 billion in 2023\/2024, driven by sustained rental escalation and income contribution from additional properties. Our forecast assumptions include (i) stable office occupancy rates, (ii) up to 5% rental escalations, and (iii) disclosed property infusions by certain REIT sponsors into their REITs.<\/p>\n\n\n\n<p><strong>\u2026 with asset infusion plans to provide additional upside<\/strong>\\<\/p>\n\n\n\n<p>We expect the REIT sector (excluding CREIT) to add up to ~200k sqms in gross leasable area (GLA), which would provide additional upside to the sector\u2019s dividends. For CREIT, we expect its sponsor Citicore Renewable Energy Corp. (CREC) to increase its solar capacity to 3GWs by 2025 from its current capacity of 145MWs. CREC is then expected to infuse its solar assets to CREIT.<\/p>\n\n\n\n<div style=\"height:26px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"font-size:16px\"><em><em>This report is prepared by PinoyInvestor\u2019s partner broker below. Find out more about <a href=\"https:\/\/www.pinoyinvestor.com\/smartinvestor\/our-partner-brokers\/\">our partner brokers<\/a> and sign up to avail their complete trading brokerage services.<\/em><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Here\u2019s a commentary on an important issue or event affecting the stock market<\/p>\n","protected":false},"author":1685,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1372,11],"tags":[],"class_list":["post-322129","post","type-post","status-publish","format-standard","hentry","category-stock-picks","category-special-reports","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-33"],"_links":{"self":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/322129","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/users\/1685"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/comments?post=322129"}],"version-history":[{"count":1,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/322129\/revisions"}],"predecessor-version":[{"id":322131,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/posts\/322129\/revisions\/322131"}],"wp:attachment":[{"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/media?parent=322129"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/categories?post=322129"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/wp-json\/wp\/v2\/tags?post=322129"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}