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REITs rush to beat rising rates as US bond yields spike

Goola Warden
Goola Warden5/21/2018 07:30 AM GMT+08  • 12 min read
REITs rush to beat rising rates as US bond yields spike
SINGAPORE (May 21): Since the beginning of the year, real estate investment trusts (REITs) have appeared to be in a rush to raise cash from private placements, perpetual securities and preferential equity fundraisings (EFRs). This came to a head on May 8,
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SINGAPORE (May 21): Since the beginning of the year, real estate investment trusts (REITs) have appeared to be in a rush to raise cash from private placements, perpetual securities and preferential equity fundraisings (EFRs). This came to a head on May 8, when DBS Group Holdings held a lunch event at the JW Marriott to promote Manulife US REIT, Mapletree Greater China Commercial Trust (MGCCT) — soon to be renamed Mapletree North Asia Commercial Trust — and CapitaLand Commercial Trust (CCT).

One of the attendees was put off by the tone of the Manulife US REIT presentation. It was just too bullish, the attendee said.

It has not gone unnoticed that REITs are planning to shore up their future distributions per unit (DPUs) with acquisitions. In some cases, declines in DPUs have been caused by property cycles cresting. For REITs that announced rights issues last year, their DPUs could have fallen because of the dilution. The 1QFY2018 DPUs of CCT and Manulife US REIT fell because of dilution, although the latter also blamed downward pressure on occupancies and net effective rents and a small tax charge.

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