The Edge has highlighted that some local REIT which issued commercial mortgage-backed securities (CMBS). They are Ascendas, CapitaCommercial, CapitaMall and Suntec.
We can access the yield percentage and gearing level quick conveniently by historical data. However, we may need more financial knowledge to understand the source of fund or borrowing which has propelled REIT in the last few years. The word ‘mortgage-backed’ has triggered the alarm bell.
In pursuing the high yield distributed by REIT today, the question of sustainability has not been answered. As highlighted in the report, there are plenty of debt maturing next year and the subsequent years, thanks to the booming of acquisition in the last 3 years. With the refinancing need in the region of multiple billion, REIT will not get cheap refinancing again for sure.
High Yield carry High Risk too. Nonetheless, REIT with strong parents will most likely survive the credit crunch.
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