Jun 5 2014, 06:34 PM
QUOTE(Pink Spider @ Jun 5 2014, 04:32 PM)
Aiyo 
e.g.
20 sen divvy p.a.
Price RM2
current yield = 10%
u buy
Later interest rate rise, that REIT kena dumped by investors
20 sen divvy p.a.
Price RM1.80
current yield = 11.1%
Yes, u lose some capital, paper loss
But u still getting 20 sen p.a. cold hard cash
I think what he's saying is that rising interest rates will affect overall distributions for the REIT... e.g.
20 sen divvy p.a.
Price RM2
current yield = 10%
u buy
Later interest rate rise, that REIT kena dumped by investors
20 sen divvy p.a.
Price RM1.80
current yield = 11.1%
Yes, u lose some capital, paper loss
But u still getting 20 sen p.a. cold hard cash
Generally speaking, rising interest rates = higher interest repayment to banks = less cash for distribution... Not saying the 20 sen p.a. cold hard cash will reduce, but it is possibility...
To know the impact of rising interest rates, need to study and understand the debt structure and maturity for the REIT.
To be fair, many REITs have locked in their rates for the near future, so I don't expect rising interest rates to have that much of a pronounced effect in that similar time frame.
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