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There is now an option for investors to hold their REIT and stock investments under a PERA or Personal Equity Retirement Account courtesy of DragonFi. The benefits of doing so include:

*A 5% tax credit on contributions (up to ₱10,000 per year for Filipinos and ₱20,000 for OFWs)

*All investment earnings and reinvestments are exempt from income taxes. For stocks and REITs, dividend tax will go from 10% to zero
*PERA funds are not subject to estate tax in case of the account holder’s passing

*Funds in a PERA account cannot be seized in insolvency proceedings.

*Companies can contribute to employees’ PERA accounts, making it a great employee benefit

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In a world often characterized by market volatility and the relentless pursuit of exponential growth, dividend investing stands as a beacon of stability and a powerful engine for long-term wealth creation. Far from being a relic of a bygone era, the merits of investing in companies that consistently share their profits with shareholders continue to resonate deeply with investors seeking both financial prosperity and, perhaps more importantly, profound peace of mind.

At its core, dividend investing revolves around acquiring shares in profitable companies that distribute a portion of their earnings to shareholders in the form of regular cash payments – dividends. This seemingly simple concept underpins a sophisticated and remarkably effective investment strategy, offering a multitude of benefits that extend beyond mere financial returns.

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For many real estate investment trust (REIT) shareholders, the immediate appeal lies in the consistent and often growing dividend payouts. So, when a REIT announces an expansion – be it acquiring new properties or developing existing ones – the natural expectation is that this growth will translate directly into fatter dividend checks. However, to say it doesn’t really impact you at all for expansion to increase the revenues and profits of a REIT if the new shares issued to pay for that expansion don’t allow the dividend to increase highlights a crucial point: the relationship between expansion, new share issuance, and shareholder value is more nuanced than a simple dividend bump.
While a static or even declining dividend following an expansion funded by new share issuance can certainly be disheartening, the assertion that it doesn’t really impact you at all is an oversimplification. Neutral or non-accretive injections could help diversify a REIT’s portfolio or set a REIT up for future growth.

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In all but one of our Philippine REITS, the parent or sponsor companies are also publicly listed. It then begs the question of where best to invest, in the parent or the REIT?

We first need to be clear on what we are investing in. Let’s compare Ayala Land / Robinsons Land vs their children, AREIT and RCR. Investing in the REIT is ownership of  income generating properties  which includes offices, malls, land, hotels, warehouses etc. As an investor, you become a landlord and collect quarterly dividends as your share of the REIT’s rental income. By the law, REITs are required to distribute at least 90% of income to shareholders.

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In a move that signals a major strategic expansion for the country’s real estate investment trust sector, Ayala Land Inc. (ALI) has announced the infusion of two prime retail properties into its REIT, AREIT Inc., via a substantial P19.5-billion property-for-share swap.

The Assets at the Heart of the Deal
The massive share swap involves two of Ayala Land’s well-known mall properties:

    Ayala Center Cebu (Cebu City)
    Ayala Malls Feliz (Pasig City)

In exchange for these high-value properties, AREIT will issue 444.131 million primary common shares to its parent company, ALI.

Why This is a Game-Changer for AREIT
The addition of these two dynamic retail destinations is set to revolutionize AREIT’s portfolio, driving significant growth and diversification:

AUM Boost: The infusion will swell AREIT’s total assets under management (AUM) to an impressive P158 billion.

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