AYALA-LED real estate investment trust AREIT Inc. will likely deliver a net income of P7.1 billion this year, Maybank Investment Banking Group said, driven by continued asset infusions, particularly in the second half.

In a report last Thursday, Maybank forecast that AREIT's 2024 earnings would rise by 44 percent year on year amid strong revenue and driven by an increase in gross leasable area (GLA) and assets under management (AUM).

AREIT saw its 2023 net income grow by 43 percent year on year to P4.9 billion following the purchase of new office buildings and malls in Metro Manila and Pampanga. Its properties registered an above-industry average occupancy of 97 percent.

Total revenues rose 41 percent to P7.14 billion thanks to steady operations and consistent asset infusions.

The Ayala-led firm also remained Maybank's top pick in the REIT sector due to its "proven ability to infuse assets while maintaining its occupancy rate at 97 percent and weighted average lease expiry at 10 years in 2023."

Earlier this year, the real estate investment trust's sponsor Ayala Land Inc. (ALI) and its subsidiaries AyalaLand Offices and Glensworth Development sold a total of 181 million common shares of AREIT for P5.6 billion in a property-for-share swap deal.

The investment bank noted that ALI shareholders would have to sell an additional 89 million AREIT shares in compliance with the free float requirement of 33.33 percent for the said acquisitions.

"As such, we expect another tender offer by the second quarter of 2024, which may provide a good entry point for investors," Maybank said.

The transactions, subject to regulatory approvals, will likely expand AREIT's GLA, or total floor space that generates rental income, by 326 percent to 3.9 million square meters and its AUM by 34 percent to P117 billion.

"The sponsorship of ALI ensures long-term growth prospects as it provides a healthy pipeline of infusions," the investment bank added.

AREIT, the Ayala Group's commercial REIT vehicle, has a portfolio of offices, retail and industrial lots as well as hotels strategically located in commercial centers in Metro Manila and key provinces.

The company's shares dropped by 10 centavos, or 0.29 percent, to P34.80 apiece last Friday amid a 2.09-percent decline for the benchmark Philippine Stock Exchange index.

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