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13-02-2016, 09:52 AM
In 2008/2009, times were hard but honestly as compared to now I do not see retail shops with closed shutters, ghost logistics buildings, amazing local hotel deals on websites to fill occupancy. So the difference in now and then is the real demand sentiment is much weaker on top of the bleak future where there is low capital inflow from foreign countries (Chinese nor the western funds are coming in). From 2008 to 2014, we had chased up prices, dpus, yields which lead to higher expectations and valuations from investors and now to sustain them we have seen most of the REITs resort to financial engineering and fair value adjustments (and not actual demand growth) to maintain their yields. Last but not least, the probability of interest rates going up for next 5 years is higher than in 2008 and 09. I am not sure whether we can have the income or inflation to support and maintain the dpu growth.
All REITs will probably know how to issue rights to shore up financially but the fundemental problem is whether the underlying asset will continue to perform because of local, regional growth or even global growth? It becomes a different monster then.
Like i said earlier, just gut feel. Analysts probably can run stress test on dpus to see the impact and predict at which levels where investors would plan to withdraw their funds.
All REITs will probably know how to issue rights to shore up financially but the fundemental problem is whether the underlying asset will continue to perform because of local, regional growth or even global growth? It becomes a different monster then.
Like i said earlier, just gut feel. Analysts probably can run stress test on dpus to see the impact and predict at which levels where investors would plan to withdraw their funds.
