Bigger dividends await AREIT investors

The Ayala Family’s AREIT [AREIT 36.95 1.51%], which is a subsidiary of Ayala Land [ALI 31.70 4.95%], declared a P0.44/share cash dividend payable out of AREIT’s Q2 distributable income. The dividend date of record is August 26, and the payment date is September 10. Using AREIT’s current share price, the annualized Q2 dividend gives AREIT an estimated yield of 4.76%. Based on the P27/share IPO price, AREIT’s estimated yield is 6.52%. The Q2 dividend is 4.8% higher than the Q1 dividend, continuing a trend of increasing distributable income that started back in Q3/20 when the dividend was P0.34/share: Q4/20’s dividend was P0.39/share (14.7% increase), Q1/21’s dividend was P0.42 (7.7% increase), and now Q2/21’s dividend is P0.44 (4.8% increase).

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Can you believe that it’s already been a full year since AREIT hit the market in 2020? The company’s 1H net income was up 31% y/y, but we don’t have a lot of contextual data to help us figure out how this might compare to AREIT operating in “regular times”. On the one hand, AREIT is still driving its distributable income upward, which shareholders will love because that directly increases their quarterly dividend take. On the other hand, the rate of that increase has fallen dramatically, with the amount of each new dividend increase falling by about half as compared to the previous increase. It’s perhaps too early to say whether AREIT’s Q3 distributable income will be impacted by rent collection interruptions resulting from the delta variant wave and the subsequent lockdowns.

AREIT’s BPO clients are relatively COVID-resilient, but if the lockdown gets significantly extended there may be a risk of legislative rent relief that could cause some hiccups. It doesn’t feel like we are headed down that path, but I don’t like to make hard predictions on how the government will behave with the 2022 election just around the corner. 

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