There are important considerations for income focused REIT investors: decent returns, moderate risk and stable and growing dividends per share (Ahem! I’m looking at you FILRT and DDMPR).

Even without further acquisitions, a well run REIT can maintain or slightly increase the dividends from contracted rental escalation, managing costs and attracting quality tenants. But the biggest determinant in a REIT’s ability to substantially grow dividends is the  continuous acquisition of assets with a stable rental income.

Although REITs can acquire properties not owned by the sponsor, it is unlikely to happen. There are also REIT sponsors with plenty of properties but have so far not shown concrete plans of infusing them into the REIT (Vista Land, DoubleDragon)

3 REIT sponsors that have clearly demonstrated a commitment to growing their REITs are Ayala Land with AREIT, Robinsons Land with RCR and Citicore Renewable Energy with CREIT. So what can these companies infuse into their respective REITs in the future? What is their growth runway?

Ayala Land:

-34 malls (2.1M sqm)

-71 office buildings (1.4M sqm)

-4000 hotel rooms

-314,000 sqm industrial warehouses

-11,300 hectares landbank

These are just existing properties and they build more every year – their capex for 2024 is 100B pesos. Not only that, AREIT can potentially acquire properties from other Ayala companies. Solar farms from ACEN, data centers from Globe and hospitals from Healthway.

Robinsons Land:

-54 malls (1.62M sqm)

-31 office buildings (793,000 sqm)

-4,243 hotel rooms

-244,000 sqm industrial warehouses

-832 hectares landbank

Their capex for 2024 is 22B pesos. They are also part of the Gokongwei Group, which includes Universal Robina, Cebu Pacific and Robinsons Retail.

Citicore Renewable Energy:

The capital recycling mechanism that REITs offer their sponsors becomes even more pronounced with CREIT. It acquires raw lands to lease to CREC – which develops and operates solar farms, increasing its revenue and investing some of it into CREIT to acquire more land. CREC aims to develop 1GW of solar farms every year from 2024-2028 and they have a track record of delivering. Fresh from their IPO, CREC will spend 35B pesos this 2024. With the global push towards renewable energy. CREITs growth runway is very long indeed. Interestingly, deep-pocketed SM Investments (SMIC) now owns 28% of CREIT (CREC owns 32%) and I consider that as a vote of confidence.

AREIT, RCR and CREIT are my top REIT holdings. They have consistently grown their dividends. Moreover, they are transparent and very good at communicating with shareholders and their sponsors have shown a commitment to growth.