DDMPR and FILRT’s stock price are now down -45% and -50% respectively from their IPO. Consequently, this has pushed their dividend yield to around 8%. Firstly, investors are selling REITs (and stocks in general) and buying bonds due to to the high interest rate environment. For example, the PagIbig MP2 had a dividend yield of 7% for 2022 and its government guaranteed.

What is happening is simply the market doing what it does. Because REITs are riskier than bonds, then their yields should be higher and this is achieved by its price falling. Also, there are a total of 8 REITs available to choose from and investors are selling those with problems and buying those with better fundamentals (WALE and occupancy). FILRT’s issue is its falling dividend (-30%) which is never a good sign. DDMPR’s dividend has also dropped though not as much as FILRT’s. There is also a lack of clear and concrete growth plans from its sponsor, DoubleDragon.

At 8% yield (and it will probably increase some more if the price continues to drop), should you buy or sell these 2 unloved REITs? If you already own some FILRT and DDMPR, don’t sell and realize the paper loss. Just continue to hold them patiently and collect the dividends. Even if the quarterly dividends have decreased, it is very unlikely to be zero unless all of their buildings burn to the ground. However, I would not recommend buying these 2 even if the yields are tempting. At the moment, there are better quality REITs and dividend stocks that are practically on sale at low prices so I’d rather buy those. I would pick a REIT with a reasonable yield and growing dividend than one with a high yield but whose quarterly dividend per share is stagnating or falling.

Will they ever turn around? That depends on what management does. DoubleDragon can infuse some CityMalls and CentralHub warehouses to derisk DDMPR’s portfolio. In fact, Filinvest did this already by infusing the Crimson Resort Boracay property into FILRT to diversify away from offices. They could also consider repurposing some of their untenanted space or even consider dropping rents to attract tenants. I remain hopeful for these two battered REITs but in saying that, we need to invest using facts, not hope.