#reits

I almost never comment on REITs as that’s not something I’m familiar with

But in my work, I get to know intimately the various rental rates of mall spaces.
We have some clinics in malls and in recent times, some of these leases r up for renewal

All have been renewed at LOWER rates or the same rate, but with lots of concessions (free advertising, waiver of GTO sharing, longer lock in lease periods at fixed rates, free car parking coupons every month)

I think all tenants will nego for lower leases.
It’s v competitive now because if the rates r not lowered, there r many new malls dying for our business. I reckon all this will start showing up in the earnings of REITs this yr, but prob more obviously next year where there’s a full year of the lowered rates
Occupancy levels will still be good though. Tenants r usually loathe to move because of the sunk in costs in renovating

Note that I’m talking about mostly retail mall spaces, so not all reits

I’m just sharing my real life experience, so don’t start asking me about reits, I don’t have a clue.
Read what u will into all this.

Read more
29 likes 31 comments
Sporeshare

Not so rosy yet the share price trade at a premium level for most of the Reits counter. Dyodd

kc2024

Best info always comes informally. But good lah, else it gets more and more expensive to see a doc.

Anyway, it does not make sense to keep increasing rent. If reit can maintain (or just reduce a bit) the rent and the DPU does not drop too much, then it’s ok. At current price, most yield is more than 5%, with only 30+ gearing, a few years of interest cover. So I would say it’s still quite a good tool if one invests for dividend especially when local FD interest is still low and Singapore bond is just about 2%.

Hachiko

No wonder PLife so huat. Mount Elizabeth & Gleneagles sign one lease contract already is 15+15 years! No need to re-negotiate every 2 years.

hy1106

Have sold my REITS as the future is not so bright

Bluechipfan

Early adopters are winners during low interest rate environment. Now with interest rate poise to grow globally, I am not too sure since almost all reits generate their growth with borrowed money. For reits to negate the effect of higher interest rate, the only way is higher rental rate and or expansion and the latter will need more borrowed money. If economy is booming all is well but that seems unclear.

Bluechipfan

Reply to @ThumbTackInvestor : lol I am not vested in any reits. I was lured by the relative high dividends and have been looking at it. However, it seems reit price keep corrected to 'maintain' the high yield and my conclusion is that early adopters have benefited and this may not be the best time to buy reits.

  View More Replies Small loading
ThumbTackInvestor

Actually, we got some spaces in office buildings in CBD area, rental maintained but a lot of concessions given

This round lease renewal... tenant firmly in control
Quite different from 3yrs ago

Hachiko

Reply to @ThumbTackInvestor : Commercial rental should bottom this year

  View More Replies Small loading
duckie

Move to paya lebar. So we can bike down to kallang river together!

duckie

Reply to @ThumbTackInvestor : This isn't China. Not everyday have IPO. Hahah

  View More Replies Small loading
onlybuyneversell

CMT malls ar? Their overall rental reversion has been negative. Or Bedok point of FCT? :)

ThumbTackInvestor

Reply to @onlybuyneversell : I think most malls are about the same
CMT malls r quite well run actually
They engage their tenants to run promos all the time

opy

Wont clinic needs to consider cost of reno and move too? Cheaper in rental more than enof to offset the move?

ThumbTackInvestor

Reply to @opy : That’s why nothing’s moving lo
Landlord usually flexible enough such that we don’t have to move

Master_GongJiaowei

Yup agree that retail is not going to do well moving forward. In general avoid Reits but there are some good ones that will still continue to grow albeit at a slower rate. Dyodd

There are more for you ...

View more and participate in our discussion now. It's FREE.

Creating an account means you’re okay with InvestingNote's Terms and Conditions