VREIT has a very high dividend yield of 12%, reflecting the high risk that investors attach to it. Although it currently reports an occupancy rate of 97%, it looks like that will not be maintained in the future if we believe what netizens on X are saying:
VREIT would not be the first REIT to lose tenants. Tenants come and go all the time, just ask DDMPR and FILRT. Their rental income dropped during the POGO ban. In fact, they both haven’t returned to their previous level of dividend payouts. Even investors who self manage an apartment rental or an AirBnB expect vacancies to occur.
What is unique to VREIT however is that more than 75% of its rental income is from related companies in AllValue Holdings. Given the disaster performance of SIPCOR and PrimeWater, the overvaluation of Villar Land Holdings and the political baggage of the family – consumers have lost confidence in the entire Villar Group. Also notable is the more than P5 billion in accounts receivable that sits on VREIT’s books which is an obvious sign that its tenants are not paying on time!
As a landlord, VREIT should never have allowed such dependence. Even mall giants like AREIT and RCR make sure they have a variety of tenants to lean on. I don’t think Vista Malls have a location problem. What they have is a management and identity problem. They are community malls and should embrace that niche. Why have a cinema that nobody goes to? A community mall is where you go for your daily needs – cheap groceries, a light afternoon snack, play area for kids, a hair salon, e-gaming for teens, plus serve as a venue for community events. They can even support entrepreneurs who are starting out with reduced rental rates. Whether the dismal management we see in SIPCOR and PrimeWater is also true to Vista Mall remains to be seen. Investors in VREIT just need to be aware that a juicy 12% yield carries a certain level of risk.
philreitinvestor.com 