A peek into global REITs
Since its creation in the United States, real estate investment trusts (REITs) have gradually expanded globally.
On Sept. 14, 1960, then US President Dwight D. Eisenhower signed a law that introduced REIT as a new form of investment meant to bring the benefits of commercial real estate to regular Americans. REIT, by definition, refers to a company established primarily for the purpose of owning income-generating real estate assets that can provide a return to investors from rental income.
The emergence of REIT companies began in 1961 and the initial properties in the portfolio included community centers and shopping malls. Among the first REITs in the US were Bradley Real Estate Investors, Continental Mortgage Investors and First Union Real Estate (now Winthrop Realty Trust).
In 1969, the Netherlands introduced the first REIT in Europe, jumpstarting the spread of REITs globally. Throughout the 1970s and 1980s, other industries such as lodging and resorts, apartments and warehouse and distribution facilities, central business district (CBD) office buildings, racetracks, health care facilities, self storage and suburban office parks took part in the REIT market.
The US Tax Reform Act of 1986 allowed REITs to operate and manage real estate, rather than simply owning or financing it, initiating the growth of the modern REIT era.
Since the early 2000s, REIT has attracted other properties such as gasoline stations, bank branches, data centers, farmland and casinos, outdoor advertising, electric transmission lines and post offices, among others.
Today, there are REITs in about 40 countries, according to the National Association of Real Estate Investment Trusts. The Philippines’ first ever REIT debuted last year. Listed below are some of the most promising REIT offerings worldwide.
SmartCentres REIT is one of the largest REITs in Canada, with a portfolio of 168 strategically located properties. SmartCentres has approximately $10 billion in assets and owns 33.9 million square feet of retail space with over 97 percent occupancy. Throughout the COVID-19 pandemic, it has remained resilient and maintained a healthy balance sheet.
What’s most promising, however, is its pipeline development project which is expected to begin construction within the next five years. The company plans to build rental apartments, condominiums, seniors’ residences, hotels and retail, office and storage facilities. According to its management, these projects will create an estimated $3.2 to $3.6 billion of value for the REIT, which is worth approximately $19 per unit.
One of the REITs to look out for is Australia’s Goodman Group (GMG). Among the largest industrial property groups publicly listed on the Australian Stock Exchange, GMG owns and develops real estate around the world, from large-scale logistics facilities to business and office parks. According to its website, it has A$57.9 billion worth of total assets under management, 363 properties globally and over 1,600 customers.
Its share price was one of the most dominant REIT performers last year and has remained strong. It also reported a 15 percent increase in its operating profit to A$1.22 billion for fiscal year 2021.
Japan Real Estate Investment Trust
Listed in the Tokyo Stock Exchange in 2001, Japan Real Estate Investment Trust is one of the first and biggest REITs in Japan. Out of the 76 properties under its portfolio, 71.8 percent are located in the central wards of Tokyo, specifically Chiyoda, Chuo, Minato, Shinjuku and Shibuya.
The company has maintained a good average occupancy rate of more than 99 percent throughout 2020 despite the COVID-19 pandemic. According to its March 2021 report, the company still posted almost the same level of operating profit as the previous period. Dividends per unit also increased to JPY 11,320, a dividend increase for the 14th consecutive period.
Ascendas Real Estate Investment Trust
Singapore’s pioneering listed business space and industrial REIT is also its largest. Ascendas Reit has a diversified portfolio across business spaces, logistics and distribution centers, industrial properties and data centers. With an asset size of S$15 billion, 211 properties in Singapore, Australia, US and the United Kingdom, and an estimated 1,520 customers, it is among the Straits Times Index’s top 30 most valuable companies in the country.
By catering to business, science parks and data centers, the REIT remains at the forefront of today’s latest trends and technologies. Despite the uncertainty last year, Ascendas Reit was able to fully distribute dividends to unit holders and has acquired S$1.4 billion worth of properties.
American Tower Corp.
One of the largest REITs globally is the American Tower Corp., an independent owner, operator and developer of real estate for wireless and broadcast communications. The leading REIT has more than 214,000 communications sites, including over 43,000 properties in US and Canada and more than 171,000 properties globally.
In the second quarter of the year, the company reported a revenue increase of 20.2 percent, for a total revenue of $2,299 million . As of Sept. 1, it is trading at $292.17 with a market capitalization of $133.29 billion.
Sources: Inquirer Archives, reit.com, stocktrades.ca, fool.ca, smartcentres.com, ig.com, goodman.com, fool.com.au, asiapropertyhq.com, dividendtitan.com, americantower.com, ascendas-reit.com, j-re.co.jp
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