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Real estate investment trust (REIT) pioneer AREIT Inc., posted P844 million in net earnings for the January-September period, a 19.6 percent decline year-over-year, primarily due to one-time gains on finance leases that increased the comparison. earnings last year.
Leaving aside the non-recurring gain under finance leases that amounted to P397.14 million in 2019, AREIT’s nine-month net income increased 36.5 percent year-on-year, driven by a stable leasing portfolio and despite the impact of the pandemic. COVID-19.
In 2019, AREIT entered into a long-term building lease agreement with Makati North Hotel Ventures Inc., a unit of AyalaLand Hotels and Resorts Corp., for the lease of a portion of the Ayala North Exchange. AREIT classified the arrangement as a finance lease and had an outstanding finance lease receivable of P2.27 billion and a recognized gain under finance lease of P397.14 million and interest income of P46.84 million.
This gain under finance lease corresponds to the difference between the fair value of the finance lease receivable and the book value of the portion of Ayala North Exchange under finance lease. AREIT remains the legal owner of the part of the building under financial lease.
AREIT’s total revenue for the nine-month period amounted to P1.4 billion, while cash flow measured by earnings before interest, taxes, depreciation and amortization reached P1.1 billion. These numbers are respectively 3 percent and 4 percent higher than the REIT plan.
Stable occupancy and operating efficiency were the key drivers of revenue and cash flow, the company said.
The acquisition of the McKinley Exchange in February 2020 and a higher occupancy rate on the Ayala North Exchange boosted AREIT’s rental income 9 percent year-on-year to P1.1 billion at the end of September.
“AREIT’s fundamentals remain strong and resilient, keeping its financial performance on track. We are also expanding our portfolio of leasing assets to seed the future growth of the company, ”said Carol Mills, President of AREIT.
For August to December of this year, the period during which it became a public company, AREIT has projected a net profit of P606 million. Adding this to P609 million in net profit generated from January to July this year, full-year net profit is projected to reach P1.2 billion, matching last year’s full-year profit of P1.26 billion.
For 2021, AREIT has projected a net profit of P1.367 billion, representing growth of around 14 percent. –Doris Dumlao-Abadilla INQ
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