AREIT profit down 19.6% at end-Sept.

Real estate investment trust (REIT) pioneer AREIT Inc. chalked up P844 million in net profit for the January to September period, down by 19.6 percent year-on-year, mostly due to one-time gains on finance leases that jacked up the comparative earnings last year.

Taking out the nonrecurring gain under finance lease amounting to P397.14 million in 2019, AREIT’s nine-month net profit rose by 36.5 percent year-on-year, driven by a stable leasing portfolio and notwithstanding the impact of the COVID-19 pandemic.

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 Ayala North Exchange. AREIT classified the agreement as a finance lease and had an outstanding finance lease receivable amounting to P2.27 billion and recognized gain under finance lease of P397.14 million and interest income of P46.84 million.

This gain under finance lease pertains to the difference between the fair value of the finance lease receivable and the carrying amount of the portion of Ayala North Exchange under finance lease. AREIT remains to be the legal owner of the portion of the building under finance lease.

AREIT’s total revenues for the nine-month period amounted to P1.4 billion while cash flow as measured by earnings before interest, tax, depreciation and amortization reached P1.1 billion. These numbers are respectively higher by 3 percent and 4 percent than the REIT plan.

Stable occupancy and operating efficiency were the key drivers of revenues and cash flow, the company said.

The acquisition of McKinley Exchange in February 2020 and a higher occupancy rate at Ayala North Exchange boosted AREIT’s rental income by 9 percent year-on-year to P1.1 billion at end-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 company’s future growth,” AREIT president Carol Mills said.

For August to December this year, the period during which it became a public company, AREIT has projected a net income of P606 million. Adding this to P609 million in net profit generated from January to July this year, full-year net profit is seen to reach P1.2 billion, matching last year’s full-year earnings of P1.26 billion.

For 2021, AREIT has projected a net profit of P1.367 billion, marking a growth of about 14 percent. —Doris ­Dumlao-Abadilla INQ