FREE Stock in Focus: AREIT Inc. (AREIT) – 28 Feb 2025 by AP Securities

NOTE: This is a Premium-exclusive stock report, originally for our Premium Access members, but we’re giving this to you free! To view other FREE stock reports, just click here. To get full access to all Premium-exclusive reports, simply upgrade to Premium Access today for as low as P399.00 a month!

Summary of Broker’s Recommendation

Current market conditions led to a significant shift in our stock picks towards more defensive names. Despite AREIT’s yield being the lowest among its peers, the company’s continued acquisitions, coupled with stable dividends and an improvement in occupancy warrant our BUY rating for the stock at current levels. Our Target Price of P45.46 translates to an upside of 16.4% relative to its last traded price.

Analysis and Opinion

Earnings in line with estimates

AREIT posted full-year earnings of P7.4-Billion, up +49.3% year-on-year (YoY) narrowly beating estimates of P7.0-Billion attributable to the significant contributions from its 2024 mall, office, and industrial land acquisitions. Additionally, the company also declared cash dividends of P0.58/share for the 4th quarter (4Q) 2024, 5.4% higher than the same period last year’s P0.55.

Infusions incoming

In order to maintain its growth target of P15-20 Billion in assets under management (AUM) per year, AREIT’s BOD recently approved the acquisitions of several dividend-accretive commercial assets located in Cebu, Davao, and Cagayan De Oro. The transaction will involve the issuance of an additional 505,890,177 common shares in exchange for 8 commercial assets with a transaction value of P21-Billion at an exchange price of P41.50/sh.

Putting the infusion’s timeline into consideration, management stated that they expect to secure SEC approval by 4Q 2025, this essentially means that accrual of earnings from the properties is expected to only start coming in by that quarter at the earliest. Despite the late accrual however, we note that the earnings from properties that AREIT infused last year only started coming in last July, this means that the full-year effect of earnings from the said properties will only be felt by investors beginning this year. We note that the completion of the infusion would bring ALI’s GLA to 4.2-Million, preserving its spot as the largest REIT in the country.

Continued shift to the right sector

The company continues to shift acquisitions towards retail, with the segment’s contribution as % of AUM ending up at 19% for 2025, significantly higher than 2024’s 11%. Our bullish stance for the pick-up in consumer demand brought by moderating inflation and wage hikes leads to our belief that AREIT’s retail shift is a viable long-term strategy for the company.

NOTE: This is a Premium-exclusive stock report, originally for our Premium Access members, but we’re giving this to you free! To view other FREE stock reports, just click here. To get full access to all Premium-exclusive reports, simply upgrade to Premium Access today for as low as P399.00 a month!

Check how many brokers recommend this stock

This report is prepared by PinoyInvestor’s partner broker below. Find out more about our partner brokers and sign up to avail their complete trading brokerage services.