{"id":335003,"date":"2026-06-02T01:59:22","date_gmt":"2026-06-01T17:59:22","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=335003"},"modified":"2026-06-02T01:59:23","modified_gmt":"2026-06-01T17:59:23","slug":"stock-in-focus-areit-inc-areit-2-june-2026-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-areit-inc-areit-2-june-2026-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: AREIT Inc. (AREIT) – 2 June 2026 by RCBC 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>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>2 June 2026<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 45.80<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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AREIT is all set to complete its sixth wave of asset infusion, unbothered by global economic headwinds and the risk of local stagflation, demonstrating effective strategy execution consistently since it went public. Its ability to pick the mature and stable office and mall properties of its sponsor, Ayala Land, Inc. (ALI), is expected to shield it from the business disruptions caused by the ongoing Middle East conflict. Note that ALI has pressed its shift button, which pivots to leasing, implying an even stronger pipeline of potential acquisitions for AREIT. We reiterate our BUY rating, albeit with a DDM-based target price (TP) lowered by 7% to PHP45.80, only due to a higher risk-free rate assumption.<\/p>\n\n\n\n

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

Further portfolio boost<\/strong><\/p>\n\n\n\n

As it stands today, AREIT\u2019s office\/mall buildings span a gross leasable area (GLA) of 1.43mn sqm, and its land covers 2.86mn sqm for a combined GLA of 4.29mn sqm, and these Assets Under Management (AUM) are worth PHP139.5bn. It is poised to grow once again by about 375k sqm (PHP19.5bn) to 4.67mn sqm (PHP159bn) when the new property-for-share swap transaction is closed, possibly by 4Q26.<\/p>\n\n\n\n

Details of the sixth acquisition <\/strong><\/p>\n\n\n\n

The new property-for-share swap deal involves AREIT\u2019s issuance of 441.13 million primary common shares to ALI (346.86 million) and its subsidiary, Summerhill Commercial Ventures Corp. (94.27 million), in exchange for two (2) properties (Ayala Center Cebu Mall and Feliz Mall) valued at PHP19.5bn at a price of PHP44.15\/share. AREIT has already obtained shareholder approval for a Deed of Exchange and is now awaiting regulatory approval.<\/p>\n\n\n\n

1Q26 earnings recap and outlook <\/strong><\/p>\n\n\n\n

AREIT reported a 1Q26 core net income (CNI) of PHP2.6bn, +25% Y\/Y, in line with our expectations. Revenues grew by 21% to PHP3.5bn, driven by the contributions of eight (8) commercial properties infused in 3Q25. We forecast CNI to rise by another 14% Y\/Y for FY26, assuming the new asset infusion is completed by 4Q26, and the resulting incremental earnings are recognized immediately. We also account for cost pressures triggered by oil price shocks. <\/p>\n\n\n\n

Balancing dividend yield and capital appreciation <\/strong><\/p>\n\n\n\n

The US\/Israel war on Iran, which started on February 28 and quickly spiraled into a widespread Middle East conflict and is still unresolved, has led AREIT\u2019s share price to fall 13% in just three months. It is also down 13% year-to-date versus the PSEi\u2019s 4.7% drop, the worst performing among the REITs we cover, which we believe is overdone. At this point, we think it is not fair to solely compare AREIT\u2019s dividend yield of 6.7% with the volatile 10-year government bond yield, which has rapidly soared above 7%. The potential 21% capital appreciation deserves an equal weight, in our view.<\/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>