While I was stuck in the jam on the way back home just now, I saw that the Mines Shopping Centre now belongs to
Anyways, back to my thought. I’m wondering if REITs is being used by huge property groups to sell off their not so profitable buildings and use the money to invest somewhere else. For example, lets say a huge property firm will try to apply for a REITs licence. Once they have been given the green light, They wills etup the REIT management company, then buy all the least profitable properties in their main companies holding. Then the public will buy into these REITs because in their mind, “Hey, this is a huge property company doing REITs. Since they are so reputable, I don’t see why I should not invest in their REITs.”
Hence, these land companies can wash their clean off this less or sometimes, even unprofitable properties and pass the burden to investors. These are usually commercial properties in prime areas but yet have very low tenancy rate. Their fund mgmt company will buy the building and say that there is a huge potential in that area for rental growth. But of course, that statement is very subjective.
But bear in mind, I’m not saying that all REITs are doing this. They may not even be doing it at all. All I’m saying is; be careful if you do decide to invest in REITs. Make sure you know what their underlying properties are. Don’t simply just buy because the company is reputable. A lot of companies now are misusing their reputation anyway.
In my opinion, the REIT worth buying into would be Sunway REITs (if they decide to list here-lah). According to some quarters, they will most probably inject all their profitable properties like Sunway Pyramid, Lagoon, the medical centre, the hotel as well. That, in my opinion sounds like a damn fine portfolio for any REIT. And no, Sunway group is not paying me a single cent to say this. Though I wish I would get paid for my investment tips like Research companies do. After all they are no different from the weather man who predicts the weather everyday. Right or wrong also cannot blame them. Hahahah!!!
Boodyboy, out!!!
1 comment:
There are terms and conditions before a Management Company can set up a REIT. Especially the qualities of their properties to be injected. It is not as simple as just inject any ABC properties. SC has final say as to whether the properties are of qualities or not. Also, valuation will be conducted onto these properties and it will be disclosed in the Prospectus. Hence, investors would have the comfort to know what are they investing.
Next, when the REIT has been set up, all future acquisitions are also subject to terms and regulations. The trustee will ensure that MC will invest in quality property. They can only approve subject to valuation being done.
If the property has low tenancy, should the MC intends to go ahead with the acquisition, Trustees' and SC's approval are required.
Agreed that investors should understand and aware what they invest in by reading the Prospectus. But be rest assured that all collective investment schemes are regulated in Malaysia.
And FYI, Sunway is going to be listed soon. :)
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