Analysing REITS

[opmi]

Landlords also need to pay for bank loan interest and pay salaries and pay unit-holders (>90% of income).

Not exactly collecting passive income as feudal land-owners.

[karlmarx]

There is nothing 'fair' or 'unfair' about the contracts between landlords and tenants. It is simply a reflection of the relationship between the tenants and the landlords. And apparently, how much the former depends on the latter.

That is why properties are valued higher than equities, most of the time.

If I were one of the tenants, I will think about how my business can be less reliant on the landlord.

So the growth of e-commerce is partly also a response to the 'tyranny' of the landlord. And e-commerce will continue to keep them on their toes.

Since this situation of 'unfair' landlord-tenant contracts is largely a result of market forces, I think the reporter raised unnecessary alarm, and may perhaps be motivated to earn short-term political points. I don't recall our local papers have the habit of attacking business establishments.

After all, the landlord did enter into a competitive bid to 'own' the site, and took further risk to develop the site. To also be able to set market rates on their tenants, for the risk they took, does not seem unfair. Tenants can always choose to go to other landlords which they think offer better value, or re-think their business model.

Eventually, and like all other businesses, landlords which do not value add to their tenants over the long-term will fade suffer from their own myopic business practices. So there is no need to worry.

[holymage]

Agree with Karlmarx.

As long as there is a free market with health competition, there is nothing "fair" or "unfair".
Jumbo Group's JPOT discontinued its Vivocity lease, when Mapletree Commercial Trust insisted on increasing the rent and recognised that there is too much competition in the Hot Pot segment. After JPOT left, another tenant took its location and paid the higher rent. If the higher rent is taking advantage of tenants, we would expect a higher turnover among tenants and even higher vacancies. Obviously, the prime location in Vivocity enables Mapletree Commercial Trust to increase its rent, until a breaking point whereby it is not commercially viable for tenants to pay for it. If, in return, tenants keep raising prices of good and services, customers will just do their shopping elsewhere until the prices are affordable. Simple economics.

Lastly, don't think REITs/landlords will just be collecting rent and assuming no risk during this crisis. As shared in another thread, a big restaurant chain like Cheese Cake Factory has declared that it is unable and will not be paying rent to its landlord. Well, sequentially, the landlord and its counterparty bank will received collateral damage.

On a side note, unfortunately, in most markets, it has already developed into an oligopoly or monopoly. For example: US airliners, that is why Warren Buffett invested in them.

[thor666]

I beg to differ. Tenants do not always have a choice - I believe Capitaland and Frasers alone take more than 60% of Singapore market. Tenants have to fork out costs in decoration, getting them to fork additional for "hiring of services to maintain the mall, and contribute to the mall’s marketing expenses" doesn't seem right (this is different from making good the store itself) and yet tenants need to contribute their profits out to landlords.

Tenants have a choice where they open their stores (market options), but they rarely have a powerful stance negotiating with the players in the market (lopsided standard contract clauses).

I also do not believe the article is coincidental or overzealous - the people (former MP) and secondary link of fairer landlord-tenant engagements (Jewel retail is under ministry of finance) suggest to me a soft power push for legislation.

High theories aside, I hope that brings a different and useful perspective to you.

Sent from my ONEPLUS A5000 using Tapatalk

[brattzz]

this is just like MND's owned wet markets verus capitalland's supermarkets...

please build more wet markets!

[CY09]

Its the same issue as building more hawker centres at mrt vicinity vs having a mall.

If you build a NEA hawker centre next to a mrt station, retail malls in the same area face a competition because their F&B tenants have to compete with hawker centre. Without the presence of a hawker centre, retail malls can extract more rent from F&B. One comparison is Tampines and Bedok.

Tampines can support 3 big malls because the hawker centre is quite far from the mrt station vis-à-vis Bedok which has 1 large mall, 2 smaller malls and a hawker centre that has been next to the mrt station from history. The 2 smaller malls have little footfall because the hawker centre absorbs the crowd. The same observation can also be seen at Jurong East and Clementi.

In my view, the building of a hawker centre puts a strangle on retail mall's revenue

[citycyclonegiraffe]

https://sginvestors.io/sgx/reit-listing/sector is good for analysing SREITs

Do you know of anywhere where there is an Australian equivalent of this website and information..??!!

[Shiyi]

Can anyone help me to understand the difference between "Income available for Distribution" and "Distribution to Unitholders"?
I read the latest result of SPH Reit. Income available for Distribution is $77 m and Distribution to Unitholders $44 m. Where has the $33 m balance gone to?

[donmihaihai]

Can anyone help me to understand the difference between "Income available for Distribution" and "Distribution to Unitholders"?
I read the latest result of SPH Reit. Income available for Distribution is $77 m and Distribution to Unitholders $44 m. Where has the $33 m balance gone to?

Retained.

[Shiyi]

Isn't that a rule that REIT has to distribute 90% of the earnings to shareholders?