Alex Yuen asked 9 months ago
Hi Rusmin,
In the videos you shared about Reits having perpetual securities and should be included in calculation of gearing ratio.
It really got me thinking. I have an impression that it's like a form of financial engineering in attempt to "hide" the borrowing.
Although it has no maturity date, but it is still fundamentally borrowing money. Maybe they can't get from banks?
So far what are the Reits have you encountered that have a growing trend of perpetual securities?
It feels like a bubble.
Thank You
Alex Yuen
Rusmin Ang Staff answered 9 months ago
Hi Alex
It sounds like one but I don't think all Manager has the intention to make the gearing ratio on the low side. Perps has its own advantage because they do not have to worry as much when it comes due since they can extend it quite easily at slightly higher cost of borrowing. There are quite number of REITs with perpetual securities: FCT, ESR, Keppel, Suntec, Cromwell, Capitaland Ascendas... Just make sure that we include them in our calculation and if they failed our criteria, then we will just move on.
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