Those measures will further test investor appetite for Singapore’s REITs. With a 26% plunge, a gauge tracking them is heading for its worst quarterly drop since 2008 even though the firms offer the region’s highest yields. Unit prices have tumbled in recent weeks on mounting virus concerns and a sell-everything mentality in global markets.
The trusts have “factored in severe declines” into distribution per unit, but the impact on net operating income might be bigger than during the global financial crisis, Jefferies analyst Krishna Guha wrote in a note. “Current valuations are not even close to GFC troughs,” and the closure of public venues can last longer, the report said.
Leisure and entertainment as a tenant category accounts for an estimated 5% of gross rental income for CapitaLand Mall Trust and Frasers Centrepoint Trust, and up to 13% for Suntec Real Estate Investment Trust, the Jefferies note added.
