News & Articles Surge in interest in REITs following Bank Negara interest rate cut
Surge in interest in REITs following Bank Negara interest rate cut
18 Jul 2016
PETALING JAYA: There have been a surge in interest in real estate investment trusts (REITs) following Bank Negara’s move to cut the benchmark overnight policy rate (OPR) by 25 basis points to 3% on July 13.
IGB REIT, MRCB-Quill REIT and YTL Hospitality REIT have risen to all-time highs.
IGB REIT rose to RM1.73 on July 13, while MRCB-Quill REIT surged to its highest at RM1.22 on July 14 since listing in 2007.
YTL Hospitality jumped to a high of RM1.11. An analyst noted that REITS would continue to see some interest as the rate-cut move would have an immediate positive impact on the property sector.
CIMB Research said most of the REITS have outperformed the benchmark FBM KLCI, with IGB REIT and Sunway REIT appreciating 26% and 19% year-to-date, respectively.
“We attribute the advancing share prices to yield-seeking among investors in times of economic uncertainty rather than due to the industry’s organic growth,” CIMB said.
However, moving into the second-half, it expected a slower acquisition pipeline for the REIT sector given the scarcity of appropriate and suitable assets.
Excluding Pavilion REIT and Axis REIT, which will continue to be driven by asset acquisitions in the niche industrial segment for the latter and asset injections from its sponsor for the former, CIMB said the pipeline for retail REITS remains dry for the second half of the year. “Given the anticipated slower acquisition pipeline, we expect the REITS under our coverage to continue to improve their existing assets through asset enhancement initiatives.”
IGB REIT, MRCB-Quill REIT and YTL Hospitality REIT have risen to all-time highs.
IGB REIT rose to RM1.73 on July 13, while MRCB-Quill REIT surged to its highest at RM1.22 on July 14 since listing in 2007.
YTL Hospitality jumped to a high of RM1.11. An analyst noted that REITS would continue to see some interest as the rate-cut move would have an immediate positive impact on the property sector.
CIMB Research said most of the REITS have outperformed the benchmark FBM KLCI, with IGB REIT and Sunway REIT appreciating 26% and 19% year-to-date, respectively.
“We attribute the advancing share prices to yield-seeking among investors in times of economic uncertainty rather than due to the industry’s organic growth,” CIMB said.
However, moving into the second-half, it expected a slower acquisition pipeline for the REIT sector given the scarcity of appropriate and suitable assets.
Excluding Pavilion REIT and Axis REIT, which will continue to be driven by asset acquisitions in the niche industrial segment for the latter and asset injections from its sponsor for the former, CIMB said the pipeline for retail REITS remains dry for the second half of the year. “Given the anticipated slower acquisition pipeline, we expect the REITS under our coverage to continue to improve their existing assets through asset enhancement initiatives.”
Source: Bernama.com