I don't think earnings are representative of a REITs performance since they can be distorted by non-cash expenses.. it looks like dividends were largely unchanged if you sum it up manually, and adjust for the switch from semi to quarter payments.

Profits include revaluation gains on the property, while NPI is a better reflection of the actual cash flow generation. Dividends can only come from the cash flow generated, because the 'profit' from an asset revaluation can and is usually distributed one-off when the asset is disposed and the cash realized. REITs are not like typical stocks where the companies can borrow money to pay dividends, the cash flow matching is a lot stricter.

It's not that they can't do so, but its unconventional for them to do so since they have gearing limits which corporates are not bound by.

From what I know, there is some profit sharing though it varies from tenant to tenant. There is likely to be some impact from lower shopping traffic, but it's hard to put a number on it at this point since we don't know the average percentage of sales.

And yes, investors need not panic that malls will lower their rent. Just because tenants ask for a discount, landlords are not obliged to give in. The situation here isn't anything like in HK where social unrest has resulted in malls being virtually shut down.

My view is that KIP REIT would be less affected by the covid virus fears than the bigger malls since their malls cater mostly to B40 and are located in smaller towns and are dealing in mostly consumer staples rather than being a social hangout place that the big KL malls are. People will still need to shop for necessities.

Retail REITs especially the blue chip ones will likely see their earnings drop this quarter and possibly next few quarters but should normalize once society adapts and/or a vaccine is found eventually. Society has always adjusted to pandemics.. one example I can think is HIV/AIDS which triggered a panic some decades ago. It's still transmitting and certainly fatal if left untreated but not a concern for markets anymore.

Went all in buying Al Aqar and KiP REIT in March and April...

I first went into KIP REIT in the 2018 selloff when the share price fell to 70 cents, and I topped up this time slightly below 70 cents. The net dividend yield is above 10% on my cost. KIP REIT is relatively unaffected by MCO as compared to the other retail REITS because their 'malls' are mostly grocery business which has been booming. Also, they operate in B40 and M40 areas where they don't generally face that intense competition unlike the blue chip Klang Valley malls. It's quite unappreciated for its defensive-ness.

This post has been edited by Havoc Knightmare: May 21 2020, 04:58 PM

Yeah the yield is still decent now. It's probably one of the more resilient MREITs in this environment, aside from Al Aqar. They are probably the only REIT that benefits directly from all the government spending being rolled out, BPN and the bonuses to civil servants.

Sunreit borrows mostly from its own parent company, so it's not at risk of default even if the ratio looks bad. Sunway Berhad in turn has been able to borrow very cheaply given how much BNM has reduced interest rate this year. In their most recent CP issuance, they borrowed RM 75 mil at just 2.87%. This structure is more efficient as the parent is able borrow at cheaper rates than its subsidiaries, which is then lent downwards at similar.or slightly higher rates. That way the interest cost of the entire group is minimized.

https://fast.bnm.gov.my/fastweb/public/Publ...reenId=PB050400

This post has been edited by Havoc Knightmare: Jun 12 2020, 07:34 PM

You're welcome. Just an additional note, since their interest cost will decline quite a bit in the coming quarters, this will boost their DPU. Although their DPU for Q2 and possibly Q3 will be more negatively affected by the MCO. But by Q4 or Q1 of next year when their revenue normalizes, the DPU could reach a new high due to sharply lower interest cost.

I only like Pavi KL, the others are crap, even Intermark. In contrary to your view on TRX, I expect TRX to depress the office market further with a flood of supply, which may result in falling occupancy rates of the office buildings above the mall and surrounding buildings. Menara Citibank next door is steadily worsening, refer to the link at the bottom. This will reduce the crowd patronising Intermark especially the vital lunch hour working crowd.

I am worried that the REIT sponsor will treat this REIT like a dumpster and throw in unwanted assets, hoping that Pavi KL will continue to cover their sub par performance. The odds of the sponsor doing so increases as they struggle with cash flow issues.

https://www.marc.com.my/index.php/marc-rati...gative-20190328

I don't think its a good idea to be building such assets since the yield is questionable in this market and represents a fixed investment that likely cannot be liquidated.. but having said that I don't think the vacancy rate will be too terrible since PNB has alot of subsidiaries that it can 'encourage' to rent in 118. This might just result in PNB owned entities vacating their current offices and moving to 118 (worsening the glut in other parts of Klang Valley).

Massive glut of office and retail space in Klang Valley which has been resulting in drop of occupancy rate and rental rates for the average buildings. Only the prime malls have been able to buck this trend by enjoying full occupancy rates and still being able to raise rents annually until the MCO hit. If DPU keep sliding due to falling rental income with no prospects of turning around, then the share price will only follow suit.

This post has been edited by Havoc Knightmare: Jul 30 2020, 02:13 PM

Yes, that should be lesson number one for every REIT investor, if they can't be bothered to learn anything else. Share price tracks DPU in the long term.

Agreed, Sungei Wang was a Mid Valley/Pavilion in its heyday decades ago but now its business model alone is way outdated. REITs require a bit of studying to understand the nature of their assets since no two real estate are alike.

KiP stands for Kepong Industrial Park. What do you think?

This post has been edited by Havoc Knightmare: Oct 16 2020, 07:41 PM

They may have to raise fresh equity, either through private placement, rights issue or do a quasi-equity issuance of perpetual bonds. REITs like Sunway and Axis have been doing this for years to sustain their expansion.