How to Invest in REIT

How to Invest in REIT. A Real Estate Investment Trust (REIT) is a company that owns, operates, and manages recurring-income-generating real estate. These properties could include office buildings, condominiums, healthcare facilities, hotels, and warehouses. REITs are listed on stock exchanges and are traded just like stocks.

REIT in the Philippines is governed by Republic Act 9856 or the Real Estate Investment Trust Act of 2009.

Just like mutual fund, REIT pools together funds from various investors into a single common fund. This makes it possible for individual investors to earn rental dividends from real estate investments without having to acquire and manage the properties themselves. On behalf of the investors, the REIT company leases the properties, collects rents on, and distributes that income as dividends to shareholders.

Investors earn from REITs through cash dividends. The law requires REIT companies to distribute at least 90% of their earnings to shareholders.

Investors can also earn from capital appreciation. Since REITs are publicly traded at the stock exchange where investors can buy and sell them like stocks, they are subject to capital appreciation. Admittedly though, a REIT stock could also suffer from capital loss if the company that owns it does not perform well.

Presently, only one REIT company has been listed in the Philippine Stock Exchange and this is the Ayala Land REIT (or AREIT).

Double Dragon Properties Corporation (ticker symbol: DD) has filed with the Securities and Exchange Commission on November 23, 2020 for an initial public offering (IPO) of its REIT called: DDMP REIT, Inc. This was previously the DD-Meridian Park Development Corp. No information yet on the offer date and listing date but the offer price has been set to a maximum of P2.25 per share.

At the moment, not all stockbrokers are eligible to trade REITs. COL Financial and BPI Trade are amongst those which trade REITs.

Before you could trade REITs, you will have to give your written authorization to your broker to create your Name on Central Depository (NoCD) account. Such will entail sending your personal information such as name, mailing address, date of birth, gender, and email address.

NoCD allows investors to monitor their shareholdings lodged at the depository, receiving directly from the depository monthly reports on stock position and transactions.

More information on How to Invest in REIT can be found on the PSE leaflet Understanding Real Estate Investment Trust.