{"id":326873,"date":"2024-02-22T12:53:56","date_gmt":"2024-02-22T04:53:56","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326873"},"modified":"2024-08-27T00:34:20","modified_gmt":"2024-08-26T16:34:20","slug":"stock-in-focus-areit-inc-areit-22-feb-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-areit-inc-areit-22-feb-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: AREIT Inc. (AREIT) – 22 Feb 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>AREIT<\/td><\/tr>
Company Name<\/strong><\/td>AREIT Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>22 Feb 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 42.80<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Out of all the listed REITs, we remain partial to AREIT given their current moves to diversify their exposure alongside their substantial dividend per share growth. AREIT has also managed to grow their assets under management (AUM) significantly from its IPO\u2019s P27-Billion to 2023\u2019s P87-Billion, and projected to grow to P117-Billion in 2024. We therefore reiterate our BUY rating for AREIT with a Target Price of P42.80.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Earnings surpass expectations on asset infusion boost<\/h3>\n\n\n\n

AREIT earnings for full-year 2023, excluding net fair value changes in investment properties, came in 43% higher year-on-year (YoY) at P4.9 Billion, on the back of P7.1 Billion in rental revenues. The company attributed the jump in net income to stable operations and consistent asset infusions, specifically their recent acquisitions of One Ayala Avenue East and West Towers, Glorietta 1 and 2 Mall and BPO buildings, and Marquee Mall. The aforementioned prime properties resulted in a 4% increase in dividends per share post-acquisition.<\/p>\n\n\n\n

Prime locations ensure high occupancy<\/h3>\n\n\n\n

The company maintained a significantly high occupancy of 97% which is 16.3 ppts higher than the industry\u2019s 80.7%. The company remains optimistic that it can sustain high occupancy levels as 38% of GLA with expiring lease contracts in 2024 have already been renewed, while 52% is already ongoing renewal. The remaining 10% have already signaled non-renewal, but 68% of these non-renewals already have replacements in the pipeline. Weighted average lease expiry (WALE) improved from 7.7 years in 2022 to 10.1 years in 2023, significantly higher than the industry average of 7.3 years. <\/p>\n\n\n\n

Realigning property mix away from office spaces<\/h3>\n\n\n\n

Collier\u2019s 2023 data saw office vacancy rise to 19.3% in 4Q 2023, attributable to new completions alongside surrenders from non-renewals of pre-pandemic leases. In a move that is a likely acknowledgment of this industry headwind, AREIT is looking to diversify its property portfolio away from office spaces in 2024.<\/p>\n\n\n\n

Dividend yield is not the best, but growth has been consistent<\/h3>\n\n\n\n

AREIT recently declared cash divs of P0.55\/share for 4Q 2023 which is 5.8% higher than 4Q 2022\u2019s P0.52\/share. On a full-year basis, the company\u2019s total dividends of P2.15\/share for 2023 was 8.6% higher than 2022\u2019s P1.98\/share. <\/p>\n\n\n\n

Moving forward, as their P30-Billion asset infusion completes, this would be a net positive to shareholders as we see dividends per share increase. We note that AREIT\u2019s most recent dividend is 96.4% higher than its first dividend declaration of P0.28\/share in 2020.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>