Cover PHOTO: Anna Nekrashevich / Pexels

Something good in our stock market is brewing. Three Real Estate Investment Trust (REIT) companies have been publicly listed, and two more are on the way. What does this mean for us investors and how can we grow money out of this?

Yes, the past year might not have been that kind to our economy but we fared well enough that amid the circumstances, new business opportunities have sprung. Aside from our rise in digital media, e-commerce, and delivery platforms, another beacon of hope emerged during the pandemic.

Real Estate Investment Trust (REIT) is a company that owns, operates, and finances income-generating real estate assets. Modelled after mutual funds, a REIT company consolidates the capital of investors and this allows investors to invest in real estate assets without having to fully acquire them.

See also: The Philippines' Top Conglomerates: Get To Know Bluechip Stocks To Invest In

Tatler Asia
AYALA LAND REIT
Above Ayala North Exchange / Ayala Land website

The Ayala Land REIT held its landmark listing ceremony on August 13 of last year, making history as the country's first Real Estate Investment Trust company. It was after it successfully completed its PHP13.6 billion initial public offering (IPO). Last March, DoubleDragon Properties Corp. followed through a PHP14.7 billion IPO, with Injap Sia II at the helm. Then just recently, Filinvest Land Inc. completed its PHP12.6 billion IPO. As of writing, Robinsons Land is undergoing its IPO and Megaworld is to follow in September.

We talked to Kash Salvador, director and head of Santos Knight Frank's Investment and Capital Markets, to guide us through REIT and how we could integrate it into our investment portfolio.

See also: The Richest Filipino Billionaires As Of August 2021

Tatler Asia
DOUBLEDRAGON REIT
Above DoubleDragon Plaza / Double Dragon Properties Corp. website

How can I be sure that they are good investments?

Kash Salvador (KS): REIT companies are required by law (REIT Act of 2009) to distribute 90 per cent of their net income as dividends to their investors. This ensures investors to receive dividends generated from the real estate asset portfolio’s performance.

How different are the processes of investing in a REIT-listed company and a real estate/property development?

KS: Investing in a property development definitely costs higher than investing in a REIT company, yet both investments require proper legal and technical due diligence prior to investing to check on the buyers’ financial capacity.

Whereas in investing in a publicly-listed REIT company, one can open a stock trading account, coordinate with a licensed stockbroker, and make the investment in the local stock market. The ease of investing through REITs is what led it to be called the democratisation of real estate assets.

Tatler Asia
Above Festival Mall Alabang / Filinvest Land website

What are your recommended strategies when investing in a REIT?

KS: Familiarise how the stock market and the real estate market works. REIT investments are similar to investing in the stock market with the basis of its value on the income-generating real estate assets under the REIT's portfolio.

Know the assets included in the REIT's portfolio and its historical performance. An investor must look into the asset values of the properties handled by a REIT company, the selling/rental rates of its assets, overall supply and demand performance, and other extrinsic factors like our country’s economic performance.

See also: Financial Foresight And Investment Tips For 2021 From Industry Experts

Above Santos Knight Frank and Manila House, in partnership with Julius Baer, held the webinar The Wealth Report 2021: A Global & Philippine Real Estate Investment Outlook on May 4, 2021 featuring speakers and thought leaders: Liam Bailey (Global Head of Research, Knight Frank), Carsten Menke (Head of Next Generation Research, Julius Baer), and Rick Santos (Chairman & CEO, Santos Knight Frank).

How does REIT investing impact our economy? Tell us about its pros and cons

KS: The introduction of REITs in the country gives investors exposure towards real estate investments that helps investors achieve returns through dividends. REITs are seen to attract investors for its liquidity and lower capital requirement in comparison to property investments. REITs allow developers to recycle and expand their capital further. The formation of REIT companies will also generate employment in the fields of banking, legal, construction, property management, and real estate. Because REIT companies are publicly-listed companies in the local stock market, REITs improve the real estate market through transparency and detailed information.


Find a trusted REIT advisor and make sound decisions when it comes to your investments and portfolio management. Reach out to Santos Knight Frank if you want to know more.

See also: What Is NFT And Why Is It Revolutionising The Filipino Digital Art Community

Topics