Skip to 11:30 for the presentation or to 42:30 if you just want the Q&A.

VREIT is the latest addition to the pool of REITs that we can invest in. I will point out the highlights but encourage you to watch the above video as well.

Firstly, VREIT is the only mall REIT that is available at the moment and it is an important consideration if you want to diversify away from office REITS. In the future, it will reflect Vista Land’s commercial property portfolio which is 80-85% mall and 15-20% office. In terms of growth runway, VREIT currently has only 22% of the sponsor’s 1.5 million sqm gross leasable area (GLA) and Vista Land continues to build more every year. Moreover it has a land bank of 3000 hectares.

VREIT also focuses on community lifestyle malls – VistaMall and StarMall, which tend to be smaller in size, located near residential subdivisions (some are walking distance), and have tenants that offer essential services like supermarkets. Paolo also pointed out that these malls have e-commerce built in. An interesting feature of the lease that VREIT has with its mall tenants is the addition of a variable rental rate (based on sales) on top of the minimum guaranteed rental rate. Basically, the more its tenants earn, the higher the rent and the bigger the dividend.

Now let’s talk about the actual tenants of VREIT’s malls. 75% of the rental income is from retail businesses under the Villar Group: anchor tenants include AllHome and AllDay Marts plus stores like Coffee Project, AllToys, etc. On one hand, concentration risk is definitely present. Whether the Villar’s retail businesses flourish or flounder, VREIT investors will benefit / suffer as well. AllHome and AllDay Marts are both publicly listed and VREIT investors need to keep track that they remain profitable companies who can pay rent.

At the end of the day, what matters is for VREIT to pay quarterly dividends that increase every year. It has an estimated dividend yield of 5.78% for 2022 and 9.25 % for 2023. We’ll see if it can deliver.