Price tends to creep upwards whenever near to financial result/distribution time.

Then it becomes like property developer...

Reit is appealing to investors is because its yield, and alternative way of rent collecting.

By allowing Reit involves in property development (buy a land and build a building), it just means money needs to lay out for the development and at least few years without any income, which defies the original purpose of Reit.

Mind that Reit generally doesn't have much cash due to 90% payout ratio, hence it just means the reit may need to borrow more for the development cost needed.

So it is best interest for SC to limit the allowable for buying vacant land for developing.

There are property developers that buying vacant land, develop into malls or offices and make an rental income afterwards.

I do not see why reit must directly involve in property development.
Reit supposely an passive income generating instrument, involving into direct property development, it become more "active" and expose to more risk already.

It is about risk exposure, that's why reit has gearing limit, while developers are not having any limit.

There is a big different in term of risk exposure.

Reit, worst to worst, the reit is left with properties.

While developer is about running a business already.

Reit is about limit the risk exposure while still can enjoy decent stable yield.

I also trimmed down YTLreit due to

1. EPS is pretty weak despite steady DPU.
I am more concern on EPS (realised income) instead DPU.

2. Borrowing is high, and the manager has proposed private placement to pare down, but this proposal has been dragging for year already and the proposal being extended many times.
While private placement could dilute the EPS and DPU.

For me,
there is not much attraction on most current Mreit price, may be except MQreit.

Venturing into SGreit for better yield.

Already added...

Trim down some reit with 4.x% yield one, and added up on this reit with 6.x% yield.
Can get extra 2%...

Below 6% probably won't interested me anymore at current situation.
Consider that SGreit got 5.x~6.x% mostly.

MQreit potential got some dilution on EPS/DPU (reported by some investment bank) due to private placement that needed for financing the acquisition of Menara Shell.
EPF was reported interested in the private placement.

Reit result is/should be always "flat" one, unless there is major lease renewal with upwards rental revision, or injection of yield accretion properties.

MQreit should have a rather "flat" result based on its history as well as its properties portfolio lease, expecting a 4 or 4.x cents DPU.

With current rental/lease market, it is hard to see major upwards in rental revision.

Office space supplies is ample, as well as more and more malls are popping in the coming future.

SReit has its own fair share of risk or issues.

Sreit right issue is much more common compared to Mreit, so need to prepare fork out dividend money that previously collected.

5.9% still a high yield.

Axreit gross yield is only around 4.5%, it speaks the reit fever that the market currently having.

Yup, has to agree on Axreit situation, not seeing any further catalyst for further upside.

In fact, risk of lease renewal may be rising due to soft economy situation, but industrial may weather better than commercial one.

But downside also limited, as FD rate as well as MGS are dropping.

It is mainly because of FD rate and MGS yield drop.

If FD is giving 4.5%, while reit also gives 4.5%, then FD may be preferred by most people as it is virtually little risk as compared to reit that subjected to risk of lease renewal issue as well as loss in capital.

But if FD rate is 3% vs reit 4.5%, then reit become attractive already.

Reit is always in "competition" with FD and bond yield.

Yes, especially OPR may even be cut further in near/distance future.

Having said that, the risk now for reit is lease renewal with a soft business environment.
That's why those has little risk in term of lease renewal (like IGBreit, Axreit) are being chased after until net yield below 5%.

Midvalley, this risk is minimal, as demand retail space for the mall should be still pretty strong.

But for other mall especially those considered "secondary" one, yes, it is a serious challenge, as plenty of new retail space supply is coming to the market.

There is a proposal of private placement on the pipeline to raise cash to acquire Menara Shell.

It will have some dilution effect, but not significant, as Menara Shell should be able to generate long term steady income for the reit.

I came across an investment bank expected DPU may be diluted about 5 to 10%, still much depends on the private placement issuing price.

The one worry me the most of dilution effect is YTLreit, it has much higher gearing of more than 50%, and with its private placement keep on postponing.
While EPS number is kinda weak.

This post has been edited by cherroy: Aug 14 2016, 03:17 PM

Menara Shell tenant is not stable?

http://www.thestar.com.my/business/busines...-in-shell-deal/

Since market is having a fever, I greedy a bit, sell when 1.50.

Increase in car park income due to more crowd, may be.

While rental is fixed for the lease tenure already, so not much direct impact.

Somemore, the pokemon fever won't last forever one, a few months later may be already cooling down.

I doubt mall management can use poke-stop as reason to impose rental revision on their tenant.

You can't compared the yield like that.

Investment in reit, you pay 100% cash (set aside those using margin account one), dividend received is your net yield.

For self owned property, if one is not buying full cash, and taking a loan, means it is a leveraged investment.

So the risk and reward between them are different.
One is investing with cash, one is investing using loan.

In order to compare directly reit with self owned property, we need a cash purchase property to start with.

A reit share is not a liability.

While a vacant property is a liability, one needs to pay maintenance fee, quit rent, assessment etc.

While for a collaterised loan, whereby one needs to ensure income stream to service the loan repayment.
Property price may not crash down to zero like some poor share, but there are vacant property hard to sell, hard to rent out as well if the property at wrong location.

So risk exposure is different in between them.
It is about how one comfortable with the risk taken, we can't say which is better.

Reit - easier way of artificially own a property and rent out.

Owned property - a leveraged investment that can maximize the return if situation favourable, but at the expense of hassle (collecting rent, transaction), more liabilities and risk taken in between.