AREIT, Inc. saw its shares rise last week as it sold assets to fund investments while rate cut expectations bolstered market sentiment, analysts said.
AREIT was the 20th most actively traded last week with a total of 14.59 million worth P526.25 million changing hands from Sept. 9-13, data from the Philippine Stock Exchange showed.
Shares of the company closed at P37.85 apiece, 5.3% higher than the P35.95 close a week prior.
For the year, the stock’s price rose 13.3% from its P33.4 close on the last trading day of 2023.
Analysts attributed the week-on-week growth to positive market sentiment driven by asset dispositions and expectations of rate cuts later in the year.
AREIT has sold three office condominium units worth P42.69 million and covering 339 square meters (sq.m.) to partially pay for its acquisition of Seda Hotel in Lio, El Nido.
The real estate investment trust acquired the hotel on Jan. 17 from Econorth Resort Ventures, Inc. for P1.19 billion.
“AREIT’s decision was likely viewed positively by the market as this pivots the company towards assets that are expected to generate higher yields. Despite a recent pullback, driven largely by institutional selling, this move may have renewed investor confidence, suggesting strong forward-looking growth potential.” Jervin De Celis, equity trader at Timson Securities, said in an e-mail.
“After the news hit, AREIT’s stock jumped about [around 5%], showing the market’s clear optimism around the condo sellout,” Jemimah Ryla R. Alfonso, equity analyst at Regina Capital Development Corp., likewise said in a separate e-mail.
She added that rate cut expectations later in the year further the stock upward.
“REITs have been trekking upwards as interest rates are likely to go down further until the remaining months of the year,” she said.
On Aug. 15, the Bangko Sentral ng Pilipinas (BSP) cut benchmark interest rates by 25 basis points to 6.25%, its first cut in nearly four years.
BSP Governor Eli M. Remolona, Jr. signaled another rate cut before the end of the year.
Meanwhile, AREIT’s net income surged 38% to P1.42 billion in the second quarter from P1.03 billion in the same period last year. This brought the company’s net income to P4.28 billion for the first six months of the year.
For the whole year, Ms. Alfonso expects AREIT to record P7 billion in its bottom line.
Mr. De Celis sees full-year earnings at around P6 billion.
“We project that AREIT’s [third quarter] net income will be approximately P1.5 billion. For the full year, earnings are expected to fall within the range of P5.8 to P6 billion, given the company’s asset infusions and strategic investments. AREIT’s revenue-generating capabilities remain solid…” Mr. De Celis said.
This week, Mr. De Celis placed his immediate support at P37.1 and resistance at P38.
Ms. Alfonso pegged her support at P36.9 and immediate resistance at P38.5. — Karis Kasarinlan Paolo D. Mendoza
