Threats and opportunities in the S-REIT world

Goola Warden
Goola Warden9/4/2020 06:31 AM GMT+08  • 5 min read
Threats and opportunities in the S-REIT world
CapitaLand has been something of a spectator to the upheavals in the S-REIT sector in the past two years but the way in which their REITs are managed should be an example for other sponsors.
Font Resizer
Share to WhatsappShare to FacebookShare to LinkedInMore Share
Scroll to top
Follow us on Facebook and join our Telegram channel for the latest updates.

CapitaLand has been something of a spectator to the upheavals in the S-REIT sector in the past two years but the way in which their REITs are managed should be an example for other sponsors. While the Singapore Exchange and investment bankers particularly from DBS Bank have held up S-REITs as one of the SGX’s success stories, S-REITs have faced problems and corporate governance issues aplenty in the last couple of years.

The biggest blot on the S-REIT landscape is Eagle Hospitality Trust and its sponsor Urban Commons which raised US$565 million ($768 million) in an IPO. The IPO monies were based on valuations of assets with long master leases from Urban Commons which the latter appears to have no intention of honouring. Within months of its IPO in May 2019, EHT was suspended and an investigation involving the Commercial Affairs Department (CAD) is underway.

More recently, Lippo Mall Indonesia Retail Trust (LMIRT) announced an acquisition that would cost more than the REIT’s market capitalisation. Back in 2018, OUE Commercial REIT had announced a dilutive rights issue and an acquisition that was value-destroying. OUE Commercial REIT’s sponsor is OUE, controlled by the Riady family. Similarly, LMIRT’s sponsor is Lippo Karawaci, which is also controlled by the Riady family. “Remind me never to invest in a Riady-related REIT,” a former LMIRT unitholder remarked recently.

×
Loading next article...
The Edge Singapore
Download The Edge Singapore App
Google playApple store play
Keep updated
Follow our social media
Subscribe to The Edge Singapore
Get credible investing ideas from our in-depth stock analysis, interviews with key executives, corporate movements coverage and their impact on the market.
© 2022 The Edge Publishing Pte Ltd. All rights reserved.