Please be reminded this is a Mreit thread.

So please stick to reit issue.
Ty.

YTLreit consist of local and Australia hotels.

If not mistaken (correct me if I am wrong), getting old, memory doesn't that good already,

most of the YTLreit local hotel lease is fixed for long term basic, so it shouldn't have effect on its local hotel properties even the hotel tax/levy is introduced.

I do not see the hotel tax/levy is a big issue, as the proposed levy is charged on customer, not hotel operator themselves paying.

This post has been edited by cherroy: Sep 7 2016, 03:34 PM

Reit price cannot shot to the moon one.

Generally, the upside of reit is capped by its NAV and yield.

Reit's earning is highly predictable (as basically it is collecting rental, not doing business) and revenue and operating profit won't grow like ordinary business except when there is asset injection.

While even if there is asset injection that boost the revenue and earning, it is always at the expense of higher borrowing or newly issued share, which will dilute the revenue/distribution per share at certain extent that normalise back.

The way reit EPS/DPS can grow is through
1. higher yield accretion asset acquisition/injection that boost EPS/DPS.
2. Rental/lease rate increment.
3. Cheaper refinancing cost.

So it is a "slow" process.

CMMT's just released its Q report.
Sg. Wang continues to be a big drag on its income.

The requirement of new version is not needed to be enforced strictly after migration into new server.

It depends on TS and forumers' wish.

The math is if US Treasuries yield become higher and higher, the gap between treasuries yield and reit yield become narrower, which make reit less attractive, hence foreign investors may not too keen on reit, unless with higher yield (so reit price needs to go lower)

Reit is under some selling pressure with treasuries yield rising fast after DT won the presidency.

Frankly speaking, the financial market is a bit "confuse" right now, due to unexpected DT as president, and little people can assure what to expect from him.

So with uncertainty looming in the market that may cause reit price to stay under some pressure for sometimes.

My pov
Sgreit looks more attractive with extra feature RM hedging.

Mreit apart from a few, nothing much excitement, as yield is pretty low after recent months run up.

I do not see US interest rate to go up more than 1% for next year until 2018.
Current Fed is not hawkish bias.

That's was prior before the economy data of Q3 and US president election.

QE GDP comes in at 4.3%, is quite a ok figure, so the urgency of rate cut is not a must.

While DT won the president that causing financial market to rattle especially EM currencies like RM which are hard hit recently, slashing OPR at current point is not a good idea for RM situation.

So chance of cutting rates become lower with above 2 situation unfolding.

The financial and forex market are being turned upside down, the aftermath effect to massive money printing.

I would say, it is simply crazy and confuse market out there.

Remember when DT was poise to win the president election in the morning, DJ futures once plunged 800 points, gold shoot up nearly USD60 in one day, but now totally reverse with stock market is making new high, gold reverse down. treasuries yield creeping up fast, and USD soaring. Now market panic about EM market and currencies, the market is simply too sentimental nowadays.

1997 is similar to 2008 financial crisis, difference is the former was about localise issue, happened on Malaysia, Thailand, S Korea and spilled over effect on the rest including HK, while the later one is global scale as it involved the biggest economy of the world as well as financial centre of the world.

For reit, the worst enemy is recession and deflation.
Recession - property difficult to lease out - no income for the reit, no dividend.
Deflation - property value shrink resulted less worth of reit in term of NAV.

From Malaysia pov, with a weak RM, inflation threat is more pronounced than deflation, hence this risk is not the major one.
While some reit like YTLreit, that has overseas properties in the portfolio, indirectly is having natural hatch effect against weak RM.
We can see from its recent higher distribution announced has something to do with a higher AUD exchange rate vs RM.

A weak RM is a concern for reit if central bank is using monetary policy to halt its decline by raising interest rate, which is not a case currently.

Recent weakness of reit has a lot to do with spiking treasuries yield, as even Sgreit is facing some selling pressure across.

While for economy slowdown issue, we need to see reit portfolio quality already, which played an important part how the reit can "sail" through the difficult period.
Borrowing level of reit also one of major factor, especially if the reit rely too heavily on short term debt to financial its borrowing.

Any financial crisis will surely impact every stock in the market, including reit.
It is about which one will able to come out the least impact, and keep on moving and generating income to investors and performing during boom time.

Up and down is always cyclical in nature, no stock or economy keep on going up or down without hiccup in between or indefinite in linear line.
That's why we always see choppy line chart with up and down cycle in the historical chart of stock market.

We can look from the past, every crisis always came in different pattern, different factor, different impact and most of the time, out of majority expectation.
Nobody can guess that during 2008 when DJ crashed to 6000, that after 8 years, it becomes 18000.
Who can guess treasuries yield spike to 2.3% from 1.7%, in just 2 weeks time after Trump won the presidency election.

Based on my last read on MQreit, in my memory (if my memory still intact) yes, there will be some dilution effect, and I expected around 6% or so at current pricing of 1.2x.
While if not mistaken, Menara Shell is under long term lease, so it does provides steady income for near term.

1.00~1.2 level may be a bargain then.

With treasuries yield creeping higher as well as MGS, we need >6% on reit to justify the risk taken.

MQreit also has Tesco in its portfolio.

It is not about retail reit or office reit.
It is about steadiness of its lease and income that matter the most for reit.

Retail reit is perceived having steady income, hence it commands a lower yield as more people willing to sacrifice the yield in the exchange of steadiness and consistent income stream for the next few years down the road.

It is not "special" dividend or not.
It is about distributing the dividend before private placement.

Those income generated before private placement are belonged to "old" shareholders, hence it needs to be distributed to the "old shareholder", as new shareholder through the private placement should not entitle any income generated prior before the date, hence there will be always early distribution so that all income generated/accumulated are distributed for any right issues or private placement in reit.

Similar situation to YTLreit.

At current environment, it is already a big task for reit to maintain their DPU, let alone growing... may be except IGBreit.
Office space and industrial may face the risk of non-renewal of expired lease, while secondary mall are facing occupancy issues due to potential oversupply.

Rental yield is poor due to escalating property valuation for the last few years, so it becomes harder for reit to inject yield accretive property.

Also, refinancing cost may become more expensive due to higher yield of MGS and bonds market sell down recently, which may reduce marginally their DPU for those need to refinance their due borrowing.

I am scratching my head regarding the recent bull run of reit across.

The only explanation I can guess is panic rush to safety.
As it is one area still able to offer fixed income while has limited downside. Property price won't crashing down if inflation remains a threat.

Or
Some big funds already have significant stake, pushing will make the fund look pretty and can get better performance bonus.

For individual investor, it is hard to to find reason to go for a 4% reit, when one can get the same with FD, unless the reit has good growth prospect.

Treasuries yield near 2.5% right now, even a foreign fund manages to do a carry trade with borrowing cost near to 3%, the carry trade only has 1% yield, doesn't sound attractive.

A swing on RM weakness easily wipe out the carry trade yield.
Somemore we have been witnessing a net outflow of foreign funds since last year or so.
So carry trade theory doesn't sound a strong one.

Instead it may be due to local fund houses who are keep on buying due to reason as mentioned earlier as well as lack of option for rather safe fixed income instruments.

Sell off then nothing to buy in the market...

This is similar situation facing by fund houses.
Fund houses cannot hold too much cash, they must put money in work.

We can't know for sure it must drop down, it may stay at current level, as when nobody sell, everyone holds, stock price won't go down.

While as time goes, and no buy back, we will miss the next Q DPU.

Private placement actually a diluting factor, not relating to price appreciation

The reason may be more on :
1. It generated significantly income from its Australia hotels, and with AUD appreciated a lot lately, it just means potential higher contribution in term of RM.

2. There is some "bull run" across reit going on with almost all reit registered good share price appreciation for the last few months or so, even those reit registered poor or decrease in DPU also experienced some gain in price.

IGBreit - sold,
YTLreit - sold partly before private placement and bought back at lower price after private placement.
Axreit - sold partly.
MQreit added more at RM1.2x and hold.

Those breached below net yield 5%, especially approaching 4.5%, I have tendency to sell, as it is hard to find reason to hold on a reit that yield 4.5%, when there is FD yielding 4% as well Klibor structured investment that yields about 5%.