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Investors focus on REIT management, diversification and valuations at REIT forum

The Edge Singapore
The Edge Singapore 11/27/2020 07:00 AM GMT+08  • 9 min read
Investors focus on REIT management, diversification and valuations at REIT forum
In our REITs Investment Forum, speakers gave their views on what comprises a good REIT, valuations and diversification
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According to Vijay Natarajan, property and REITs analyst, RHB Bank Singapore, several factors can fortify a REIT and make it Covid-19 resilient. Among the well known factors are asset quality, tenant quality and lease structures. In addition, businesses in general, and REITs in particular, need to adapt to changing trends. Post-Covid, the focus is on new economy sectors such as logistics assets — which are necessary with growing ecommerce trends — and data centres.

Most of all, the REIT’s manager and sponsor are perhaps the most important cog in the wheel. “The REIT needs a good manager and sponsor who are committed to growing the REIT. I think that’s the most important thing for me,” Natarajan says.

CEO of Elite Commercial REIT’s manager Shaldine Wang adds that investors always look at distributions. “Other things that investors will be keen to look at would probably be distributions, and DPU yields, because ultimately that’s the returns they are getting.” Elite Commercial REIT which listed in February this year, has outperformed its forecast distributions and DPU. It announced a DPU of GBP 0.0195 in 1HFY2020 ended June, 1% above its prospectus forecast, largely on lower funding costs than initially anticipated.

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