Select Page

Property valuation

Q&A › Category: Dividend Stocks › Property valuation
0 Vote Up Vote Down
yuki yama asked 2 weeks ago
Hi,  I'm wondering what is the significance / impact of property valuation (e.g. drop in valuation) in Reits? especially if there is no need nor plan to sell the building in question.  Thank you
1 Answers
0 Vote Up Vote Down
Rusmin Ang Staff answered 2 weeks ago
Hi Yuki The drop in valuation for investment properties usually caused by lower rental income amidst oversupply situation or expansion of cap rate due to higher interest rate. The impact would resulted in lower NAV, lower interest coverage ratio, higher gearing ratio and in extreme situation, it could subsequently breach some of the loan covenants. Manulife US REIT is a good example here. MUST's share price crashed so much because of the stress in US commercial properties.
Chin Lim replied 5 days ago

Hi Rusmin,

CICT intent to buy ION, then how how will this impact the NAV, there will be new Preference share issued instead of borrowings(gearing ratio)? Current share price also dip and rebound. Thanks

Rusmin Ang Staff replied 4 days ago

This deal is done at pretty good accretion on both gross yield and DPU but slight dilution on NAV. We will be doing a video on this, so do watch out for our roundtable.

Chin Lim replied 4 days ago

Thanks Rusmin, look forward to video soon