ahh back to good ol days where REITs giving 6%+ yield haha

Use it for reinvestment purpose, now got sales   

Bond has been rising a lot lately few years, after massive QE adopted, now it is giving back those gain only.

REIT S'pore   

My apologies yar - not laughing at U, laughing WITH U.
BIG difference yar.

As a result, do you think it is still a good buy now? Unless you are happy with the return rate given by the REITs now and able to hold it for a long period, or else I don't think it is a good bet in Malaysia.

ops..yok70, that not my inquiry..i juz copy and paste ever thing written by loryau.

I do not understand why so many said interest rate is going to rise.

With economy become slower, there is remote chance for BNM to raise rate.

The only way that force BNM to raise rate is capital flight like Indonesia, but as compared Malaysia has both trade surplus and current account surplus, and ok foreign currency reserves, while Indonesia is facing both deficit, and lower foreign currency reserves as compared.

In fact look at FD rate around, and banks hardly give good FD promotion around. All around OPR rate only.
If the rate is set to rise, many banks will rush to offer long term FD to lock up the rate already, which is little showing out there.

Unless the current account register big deficit number and shrinking foreign currency reserves, there is remote chance for interest rate to rise for near to mid term.

There is very remote chance the BNM will rise rate at this moment.

Normally central bank raise rate because
1. Overheat economy, want it to slow down
2. Capital flight (like Indonesia currently, and like 1997 crisis).
3. Tame inflation rate, but at the moment, CPI is at modest

But at the moment we already see shrinking export, slowing GDP number already.

So without 1,2,3 and slowing economy, why BNM want to raise rate?

If want to curb excessive property bubble, then can do through like 3rd property LTV, tighten loan requirement, RPGT and many more, instead raise rate.

Yes, it is hard to wish rental increment. Even though property price escalate a lot for the last few year, rental market is not following the property price.

Due to gearing ratio of less than 0.30 most of the time, rental need not increase by the same 8.3% to offset increase in interest cost. Am I right? In fact, rental only need to increase by 2.5% for every 0.25% increase in interest. I could be wrong though.

Bond yield is coming down slowly, would Reit recover slowly??

Capitamalls sees 22m units traded off-market

Capitamalls Malaysia Trust (CCMT) saw 22 million units traded off-market on Wednesday at an average of RM1.45 each.

Stock market data showed the 1.24% stake was traded at seven sen below the market price of RM1.52.

At 3.59pm, CMMT was unchanged at RM1.52.

CMMT invests, on a long-term basis, in income-producing real estate which is primarily used for retail purposes and located primarily in Malaysia.

Its shopping mall portfolio comprises Gurney Plaza in Penang, a significant interest in Sungei Wang Plaza in Kuala Lumpur, The Mines in Selangor and East Coast Mall in Kuantan, Pahang.

As at Dec 31, 2012, the net lettable area of the portfolio was over 2.4 million square feet (sq ft).

Your example is valid if REIT is using 100% loan, which is not the case. They are using 30% loan.

When OPR increase by 25 basis point or 0.25, or an increase of 8.3%, cost of funds increases by 30% * 8.3%. Rental has to increase by this amount which is 2.5% to cover the increase in interest expenses.

How you know? 

This is relation ship between yield and price, which is what we are seeing now, bond yield goes up, REIT price drop to reflect higher yield to match bond yield. Similarly OPR or interest rate is also affects the required REIT yield. If the REIT cannot grow it's earning to match the required yield, price will be sold down until the yield is reached.