RA 9856 states that at least 75% of a REIT’s deposited property must be income-generating real estate. At the moment, we have five office REITs, one retail (VREIT) and a renewable energy – CREIT. Some REITs also have a little bit outside their main offering. For example, AREIT owns industrial land in Laguna Technopark; MREIT owns a hotel and some ground floor retail in its buildings; and VREIT has 2 office buildings in its portfolio.

As REITs gain traction, we can see more types soon:

1. Industrial / logistics REIT

There have been press releases about DoubleDragon and Jollibee transforming CentralHub Industrial Centers into a REIT this year. I would be keen to see what it offers to investors and especially interested on its growth runway. DoubleDragon is no stranger to REITs, being the sponsor of DDMPR. If this plan pushes through, then it will be another investment option to choose from and will offer diversification to investors. Demand wise, there will always be a need for industrial properties and Jollibee would be a reliable anchor tenant considering how it dominates the fastfood sector in the Philippines. Where else would they prep those chickenjoy and spaghetti!

I don’t have insider knowledge in the Ayala conglomerate but there is also a possibility that Ayala will transform its logistics assets into an industrial REIT or they can just fold it into the existing AREIT. This would actually be my preferred outcome being an AREIT shareholder as I would want AREIT to grow and diversify its income-generating properties. I want AREIT to grow its market capitalization instead of having 2 REITs from the same sponsor (which will be the case if DoubleDragon decides to IPO CentralHub into a separate industrial REIT).

2. Cell tower REIT

Talking about missed opportunities here. PLDT – Smart just recently sold around 6000 of its telco towers to a couple of foreign infrastructure companies and Globe Telecom is mulling the same thing. It would have been awesome for the telco giants to spin off these assets into a REIT and we would have had the chance to earn stable and growing dividends from these cell towers. There would have been a lot of growth for this REIT as well given how spread out our islands are and our ever increasing need for connectivity. As an example, American Tower is a REIT with a market cap of $120 billion and owns close to 200,000 communication sites in many countries. It also has a dividend yield of 2.2%. More importantly, its annualized dividend per share growth rate is in the double digits.

3. Data center REIT

With Filipinos’ addiction to social media / internet usage and online businesses growing by leaps and bounds, I wouldn’t be surprised to see a REIT offering data centers and hyperscale infrastructure in the future. I hope it will be powered with renewable energy and offer a compelling dividend as well. Possible sponsors could be PLDT and Converge.

4. Healthcare and Education REIT

Another future REIT could be schools, universities and hospitals. Healthcare and education are very resilient businesses that can pay rent. Moreover, they can release some of their capital tied up in real estate and invest it in better services. Metro Pacific Hospital Holdings would be a prime candidate to offer this type of REIT.

I’m certain that there will be more companies seeing the benefits of offering REITs and more investors will see its merits. Practically any income generating real real estate can be turned into a REIT and that includes toll roads, airports, serviced apartments, island resorts and many more. Whatever REIT sprouts in the future, you can be sure that PhilREITinvestor will be watching.