This thread should be titled M-REITs....

some ppl call this PUMPin....OR issit PIMPin?

Des


Look nomore than SREITs for high yields........ no withholding tax over there.


http://forum.lowyat.net/topic/2504121

This post has been edited by prophetjul: Oct 31 2012, 04:09 PM

Done!

Only takes a sec to calculate that?

Upwards o downwrads?

From Rm1.44 to present.......

Wait for ONE YEAR at Rm1.33?

9 months later..........no show......how?

Better vbring your wife's sib;ings, nephews, neices, inlaws, etc to help out....

if i may add why stock price/NAV is important for REITs.

REITs normally have lots of borrowings. Their borrowings are given ratings based on their asset quality.

IF IF there was an asset depreciation due to financial downturns etc, quality assets will be able to
mitigate NAV depreciation better.
When assets deprecaite and NAV is affected, so are their ratings. This brings up the costs of borrowings
PLUS they may have to top up their risk profile for the borrowers as most borrowings are dependant
on their NAV.

DPU could be decreased due to the earnings being retained to balance out the borroeing risks.

As for MREITs, i have no idea whether they could be revalued upwards or downwards.
If and when economies tank, 1st to get hit are properties.

Hi....pls do not worry UNLess

you think economy will tank........this is worst scenario. We were discussin on the
implications of NAV

cherroy

the thing is this: If the NAV depreciates, how does it affect the borrowings of the REIT?

Thanks!

Instead of borrowings going up, the NAV is depreciating, thus the threshold is compressing.

Sales of assets lead to DPU reduction........

REITs, Trusts and Stapled Securities


What is the difference between a REIT and a Property Trust? What about REITs and Stapled Securities?

Real Estate Investment Trusts (REITs), Property Trusts and Stapled Securities are three different vehicles that a security investor can get into property investments. But some investors are fond of using these terms loosely without understanding the fundamental differences between them. In fact, it is not uncommon to see even respected mainstream media confusing these terms and using them interchangeably and inappropriately.

It does not help that these terms are not regulated by the authorities. A REIT could call itself a Trust and similarly a property trust could call itself a REIT without having the obligation of operating as one as per the guidelines stipulated by regulators.

In this article we will present to you the key differences between these 3 types of securitized real estate investments and why it matters that you understand the nature of each carefully in order to make an informed investment decision.

REITs

In most jurisdictions, in order for a collective property investment to call itself a REIT it must pay out a minimum of 90 percent of its rental income to unit holders annually. This comes on the back of requirements of minimum assets sizes and restrictions on business activities. REITs are also subjected to limits on the amount of loans that they can take. In Singapore, the gearing limit is 35 percent for REITs with a credit rating and 60 percent for REITs that are unrated.

The regulations imposed on REIT are enforceable by the authorities and listed REITs are subjected to a high degree of transparency and scrutiny by the government and unit holders alike.

With so much restrictions, why does a collective property investment bother to go through the trouble of manifesting itself as a REIT? The short answer - favorable tax treatments. As long as a REIT satisfies the conditions stipulated by regulators, it is exempted from corporate taxes and duties that are usually leveled against property investments companies. This means more income from your properties overall despite the stricter amount of regulations that you will have to comply with

Property Trusts

Listed Property Trusts are also collective property investments that pool money from unit holders primarily to invest in income producing real estate. Rental income is similarly distributed to unit holders after deducting costs such as management fees and other overhead. Like REITs, Property Trusts are also by collective investment codes and other regulations that may be imposed by the bourses in which they are listed.

However, and herein the most important difference between REITs and Property Trusts, is that Property Trusts are not obligated to pay out a minimum amount of its rental income to unit holders. It is also not subjected to the leverage and asset size limits that REITs are imposed with. This means that should a Trust manager decide that business is bad for a particular year, it may not distribute any rental income and unit holders can be left with no income distribution for the units they hold at the end of the financial year. Property Trusts do not receive the same types of favorable tax rulings that REITs enjoy.

Examples of Property Trusts in Singapore that have often been confused as REITs by the media include the recently-listed Croesus Retail Trust and Perrenial China Retail Trust

Stapled Securities

In the context of securitized property investments, Stapled Securities are listed property investment securities that can be a bundle combination of either REITs, Property Trusts units or even property stocks.

This commonly happens when a securitized property investment vehicle decides to apply a REIT model to a certain segment of its property portfolio while taking on a Trust model for another segment to form a single trade-able unit known as the Stapled Security. In this manner, the manager of the Stapled Security need to be bound by REIT regulations only for the segment of the portfolio that adopts the REIT model. He is then free to pursue other plans for the properties that do not require compliance to REIT regulations. Hence a Stapled Security is obligated to pay a the minimum amount of rental to unit holders only for the properties that are adhering to a REIT structure.

An example of a Stapled Security is Singapore-listed CDL Hospitality Trusts which comprises of CDL Hospitality Real Estate Investment Trust and CDL Hospitality Business Trust. Another prominent example of a Stapled Security in this region is the KLCC REIT in Malaysia that comprises of REIT units and property stocks of KLCC Property Holdings Berhad (KLCCP).

Stapled Securities are similarly bound by listing and reporting regulations that may be imposed the the respective bourses.

These are the salient differences between a REIT, a Property Trust and a Stapled Security. Several more technical differences exist between the three but its full breadth will not be covered by this short article. But the main features covered above will help you to make a more informed decision as an investor.

Weighted Average Lease to Expiry (WALE)
One of the bigger risks of managing commercial properties is vacancy. When a property, or parts of a property, is left vacant for too long, property income and distribution to shareholders will be affected. This is where the metric WALE comes in handy as an assessment tool.

Weighted Average Lease to Expiry (WALE) is used to measure the overall tenancy risks of a particular property with multiple tenants and is used by REIT investors to assess the likelihood of a property being vacated. In other parts of the world, other abbreviations such as WALT (Weighted Average Lease Term) and WAULT (Weighted Average Unexpired Lease Term) are sometimes used and practically means the same thing. In the Asia Pacific region, investors are more accustomed to WALE.

WALE is measured across all the tenants remaining lease in years in a property and is weighted by either the tenant’s lettable area or the tenant’s income against the total combined area or income of the other tenants.

Most investors are of the opinion that the longer the WALE is the better. But depending on your investment objectives, this may not necessarily be the case:

Commercial buildings with long WALE, typically of being 5 years or more, usually have the commitments of large tenants such as government departments or multinational corporations. They have little to worry about in terms of vacancy risk but larger tenants would usually mean that the property will not be able to negotiate for rent hikes as much as a property with smaller tenants. Therefore there will be a limitation in terms of internal growth.

Commercial buildings with shorter WALE, typically of between 1 to 4 years, usually have smaller businesses as their tenants who do not commit to lease terms of longer than 5 years. There is higher vacancy risk as compared to a property with larger tenants. But commercial properties like these are generally able to manifest more robust growth internally through periodic rent hikes, resulting in better growth in property income. But do bear in mind that commercial properties with shorter WALE may face higher costs in terms of leasing agent fees, advertising fees and legal fees.

So if robust internal income growth is your preference, REITs with long WALE may not exactly work in your favor. But if you are after predictability and stability of income, REITs with longer WALE may be your best bet.

You can make this statement for most equity markets!

Lookie at the US mkts.....on QE steroids~!

Pavilion Reit price has fallen quite substantially from its high of 1.64 to 1.4 presently. Are there any negative news?


Disclaimer: I do not own Pav reits

This post has been edited by prophetjul: Jul 18 2013, 08:25 AM

Has there been a general sell down of Msian Reits?

I have not been tracking them cept for Pav Reit.

Asset price will affect the NAV.

If I am not mistaken(stand to be corrected), there are regulations which guides the MAX DEBT gearing against
the NAV.

IF those REITs which are highly geared find their asset DEvalued and their NAV dives,
they will have to raise funds or sell to bring down their gearing.