AREIT Inc., the powerhouse real estate investment trust backed by Ayala Land Inc. (ALI), has just released its 2024 financial results, and the numbers are impressive! We’re talking a significant 49% year-on-year jump in net income, reaching a solid ₱7.4 billion (excluding net fair value change in investment properties). But that’s not all. The company also reported total revenues of ₱10.3 billion and EBITDA of ₱7.5 billion, both showcasing a remarkable 44% and 49% year-on-year increase, respectively. What’s driving this growth? AREIT credits its strong performance to strategic acquisitions made in 2024, including key properties like Ayala Triangle Gardens Tower 2, Greenbelt 3 and 5, Holiday Inn Hotel & Suites Makati, Seda Ayala Center Cebu, and industrial land in Zambales. Plus, the full-year contributions of assets acquired in 2023 have also played a crucial role.
It seems FILRT is waking up and making positive moves. It is transforming into a diversified REIT with malls and hotels with the aim of reducing the GLA contribution of its office assets to around half by next year :
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The board has just greenlit a major acquisition that promises to significantly boost the REIT’s portfolio. They’re set to acquire the iconic Festival Mall building in Filinvest City, Alabang, from its parent company, Filinvest Land. The acquisition will be executed via a property-for-share swap. FILRT will issue 1,626,003,316 primary common shares to FLI at a price of P3.85 per share, totaling a substantial P6.26 billion. So, what’s FILRT getting for this investment? They’ll take ownership of the Festival Mall’s main building, boasting a massive 121,862 square meters of gross leasable area. And the benefits don’t stop there. FILRT anticipates some impressive improvements to its key metrics: * Occupancy Rate: Projected to jump from 83% to 88%. * Weighted Average Lease Expiry (WALE): Expected to nearly double, from 7.3 years to a much healthier 14.6 years. This acquisition is a major strategic move for FILRT, strengthening its position in the market and offering potentially greater stability and returns for investors. However, the deal isn’t finalized just yet. FILRT stockholders will need to give their stamp of approval at a meeting scheduled for March 4th. Furthermore, the transaction requires the go-ahead from the Securities and Exchange Commission (SEC) before the ownership transfer can be completed.
Sharing some information on condotels for those wanting to include this in their portfolio. Condotels are condominium units but professionally managed as hotels or serviced apartments with the unit owner getting a share of the income.
REITs are primarily valued according to their ability to provide a steady and increasing stream of quarterly dividends. For example, AREIT’s share price has increased by +35% since IPO while FILRT has lost -55%, reflecting its reduced dividends. Another way of looking at REITs is the quality of the properties that they own. As the saying goes in real estate; its location, location, location.
Sharing these 3 fantastic videos on REITs from DragonFi. These are probably the best Youtube videos on Philippine REITs that I’ve come accross. I highly recommend watching all three from beginning to end, for beginners and seasoned investors alike.
