,As with many other industries, Malaysian real estate investment trusts (M-REITs) have inevitably been adversely impacted by the pandemic during the various stages of movement control orders and resulting business disruptions.
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THE year 2020 will continue to be in the memory and a talking point for many in years to come on how the Covid-19 pandemic has changed the world forever.As with many other industries, Malaysian real estate investment trusts (M-REITs) have inevitably been adversely impacted by the pandemic during the various stages of movement control orders and resulting business disruptions.
That said, a closer look at M-REITs reveals the potential to poise for a rebound from the current depths and reach for greater heights post-Covid-19.
Though the pandemic affects most if not all the M-REITs, the impact it has differs depending on the portfolio asset concentration and focus.
M-REITs with asset portfolios focused on cyclical sectors such as retail and hotel are severely affected by consumer sentiment and movement restrictions, given the stringent lockdown of malls and strict curbs on travel-related activities.
While still fighting the pandemic, the industrial and services sectors, including healthcare and education sectors, have demonstrated relative resiliency on the back of tenancy structure which is typically a long-term master lease with fixed step-up in rental rates.
A look at the table shows that the unit prices of M-REITs have fallen by an average of 14%, due to the general decline in business performance, decrease in occupancy rates and drop in rental income during the pandemic.CLICK TO ENLARGE
Moreover, 14 out of 17 M-REITs suffered a drop in price-to-net asset value (NAV), and 12 out of 17 M-REITs are priced below their NAV, presenting an attractive entry point for potential investors looking to ride the post-pandemic economic recovery with long-term investments and regular dividend income distribution.
M-REITs collectively own a wide range of property assets, including many iconic malls, hotels, offices, medical centres, education buildings and industrial/warehousing properties – supporting tens of thousands of businesses and serving millions of Malaysians from all walks of life.
Recognising the public duty to bring much-needed positive impact to society, the economy and the country during this unprecedented time, M-REITs have risen to the challenge in providing support for various stakeholders, including rental relief and promotional assistance for tenants to ensure business continuity and long-term sustainability.
M-REITs have also shouldered the corporate social responsibility (CSR) of ensuring the safety of shoppers, tenants, guests and employees in the premises by adhering to strict standard operating procedures (SOPs) and investing in health, safety, security and environment (HSSE) technologies that enhance screening, cleaning and disinfecting routines.