Shall we buy SPH Reit ?

SPH will put 2 Malls into their new Reit. "SPH plans to hold 70 per cent of the units in SPH REIT, whose assets are the Paragon shopping mall in the city-state's prime Orchard shopping district and Clementi Mall in a western suburb" - asiaone.com


My option is that it is good for SPH shareholders. SPH net asset value and cash will increase.

Whether SPH REIT be an good investment ?

Paragon Shopping Mall will be leased 99 Yrs to REIT. Valuation of free hold properties are high in result rental return ratio is lower. SPH REIT major investment will be Paragon. Which may hint to lower distribution yield ?

Too many shopping malls in Orchard Road. Paragon Mall located further away from Orchard MRT station. Paragon's car park is always full. It is not easy for shoppers to go to Paragon Mall. My guess to SPH REIT yield could be around 3 to 4%. It may be difficult to grow rental in Paragon especially Orchard Road. Rental increase could be 1 to 2% per year.

New SPH REIT announcement may help to improve sentiment after last Thursday 7% drop in REITs price. I will be concentrating in well perform industrial REITs. Which provide 6% rental yield. Industrial rental is cheaper than any other properties. $3 psf increase 10% is $3.3. It is still affordable. Industrial REITs yield will continue to grow faster than any other REITs. 


http://www.asiaone.com/News/Latest%2BNews/Singapore/Story/A1Story20130527-425476.html
http://www.fool.sg/2013/05/its-a-deal-sph-to-spin-off-properties-into-reit/

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