8 Real Estate Investment Trusts: Diversify with Property Investments

Real Estate Investment Trusts (REITs) have become a popular way to invest in the Philippine real estate market without the complexities of direct property ownership. REITs allow you to own shares in a company that owns and manages income-generating real estate, providing you with dividends based on the rental income and potential capital appreciation. This guide explores eight REITs in the Philippines, offering diversification and income potential for investors.

Understanding REITs: Key Concepts

Before diving into specific REITs, it’s important to understand a few key concepts:

• Income Generation: REITs are required by law to distribute a significant portion (typically at least 90%) of their taxable income to shareholders as dividends. This makes them attractive for income-seeking investors.  
• Diversification: REITs offer diversification within the real estate sector, as they typically own a portfolio of properties across different locations and sometimes different property types (office, retail, industrial, etc.).
• Liquidity: REITs are traded on the Philippine Stock Exchange (PSE), making them much more liquid than owning physical real estate. You can buy and sell shares easily.
• Market Risk: Like any stock market investment, REIT share prices can fluctuate based on market conditions, investor sentiment, and the performance of the underlying real estate.
• Dividends are not guaranteed: Although REITs are required to pay out 90% of taxable income, they are not guaranteed. Economic conditions can negatively impact earnings, thus, impacting dividends.

1. Ayala Land REIT (AREIT) – PSE: AREIT

Ayala Land REIT (AREIT) was the first REIT to list on the Philippine Stock Exchange.

• Sponsor: Ayala Land, Inc. (ALI), one of the largest and most reputable property developers in the Philippines.
• Portfolio: Primarily consists of high-quality commercial office buildings located in prime locations, particularly in Makati City (the country’s premier business district) and Cebu.
• Tenants: Typically boasts high occupancy rates and reputable, multinational tenants.
• Focus: Stable and growing dividends, driven by long-term leases and strong demand for office space in prime locations.

2. DoubleDragon Properties REIT (DDMP REIT) – PSE: DDMPR

DDMP REIT, sponsored by DoubleDragon Properties Corp., focuses on a mix of office and retail spaces.

• Sponsor: DoubleDragon Properties Corp., a rapidly growing developer with a focus on strategic locations.
• Portfolio: Includes the DD Meridian Park, a significant development in the Bay Area of Pasay City, which is becoming a major business and entertainment hub. Also includes other office and retail properties.
• Focus: Consistent dividends derived from a diversified portfolio of properties, capitalizing on the growth of the Bay Area and other key locations.

3. Filinvest REIT (FILRT) – PSE: FILRT

Filinvest REIT Corp. (FILRT), sponsored by Filinvest Land, Inc., primarily invests in office buildings catering to the BPO sector.

• Sponsor: Filinvest Land, Inc. (FLI), a well-established developer with a diverse portfolio of properties.
• Portfolio: Concentrated in Northgate Cyberzone in Alabang, Muntinlupa City, a major hub for Business Process Outsourcing (BPO) companies.
• Focus: Provides exposure to the BPO sector, which has been a significant driver of office space demand in the Philippines. Aims for stable income streams from long-term leases with BPO tenants.

4. Megaworld REIT (MREIT) – PSE: MREIT

Megaworld REIT (MREIT), sponsored by Megaworld Corporation, focuses on high-quality office properties in prime locations.

• Sponsor: Megaworld Corporation, known for its large-scale, mixed-use township developments.
• Portfolio: Includes office properties in well-established business districts like Eastwood City, McKinley Hill, and Iloilo Business Park.
• Tenants: Leases to a mix of BPO companies, multinational corporations, and other businesses.
• Focus: Reliable income streams and potential for capital appreciation, driven by the strong demand for office space in Megaworld’s townships.

5. Robinsons Land Commercial REIT (RCR) – PSE: RCR

RL Commercial REIT (RCR), sponsored by Robinsons Land Corporation, boasts a portfolio of office properties in major business districts.

• Sponsor: Robinsons Land Corporation (RLC), one of the leading property developers in the Philippines, with a wide range of commercial, residential, and retail developments.
• Portfolio: Includes office properties in key locations such as Ortigas Center and Quezon City.
• Focus: Stable and growing dividends, supported by well-located properties and a strong tenant base, often including BPO companies and other large corporations.

6. Vista Land REIT (VREIT) – Not Yet Listed

Vista Land & Lifescapes, Inc. (VLL), one of the largest homebuilders in the Philippines, plans to launch its own REIT (VREIT). It’s important to note that as of October 2024, VREIT is not yet listed on the PSE.

• Sponsor: Vista Land & Lifescapes, Inc., known for its extensive residential developments and growing commercial portfolio.
• Expected Portfolio: Will likely include a mix of commercial, office, and retail properties from Vista Land’s extensive holdings across the Philippines.
• Focus: Expected to offer diversification across different property types and geographic locations.
• Status: Keep an eye on news and announcements from Vista Land regarding the IPO (Initial Public Offering) of VREIT.

7. SM Prime Holdings REIT (SMPH REIT) – Not Yet Listed

SM Prime Holdings (SMPH), one of the largest integrated property developers in Southeast Asia, is also planning to launch its own REIT. As of October 2024, SMPH REIT is not yet listed on the PSE.

• Sponsor: SM Prime Holdings, known for its dominant presence in the retail mall sector and expanding portfolio of office and residential developments.
• Expected Portfolio: Likely to include a significant portion of SM Prime’s retail malls, along with office buildings and potentially other property types. This would provide a unique exposure to the Philippine retail sector.
• Focus: Expected to offer a combination of stable income from mall rentals and potential growth from other property types.
• Status: Monitor news and announcements from SM Prime regarding the IPO of SMPH REIT.

8. Century Properties Group REIT (CPG REIT) – Not Yet Listed

Century Properties Group (CPG), known for its high-end residential and commercial developments, is considering launching a REIT. As of October 2024, CPG REIT is not yet listed on the PSE.

• Sponsor: Century Properties Group, focusing on premium and luxury real estate projects.
• Expected Portfolio: Likely to encompass CPG’s commercial and office properties, primarily in prime locations within Metro Manila.
• Focus: Potential for capital appreciation and steady income from high-end developments.
• Status: Await official announcements from Century Properties Group regarding their REIT plans.

Conclusion: Investing in Philippine REITs

REITs offer a valuable opportunity to diversify your investment portfolio and gain exposure to the Philippine real estate market. The expanding number of REITs provides choices catering to different investment preferences, whether you prioritize stable income from office buildings, exposure to the retail sector, or a mix of property types. Before investing in any REIT, conduct thorough research, consider your investment goals and risk tolerance, and consult with a financial advisor if needed. 1 Remember that past performance is not indicative of future results, and all investments carry risk.  

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