MRMA continues efforts to maintain quality of M-REIT players

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RIGHT TRACK: Photo shows Sunway Pyramid. M-REITs are growing both in terms of asset quality and growth yields.

KUCHING: The Malaysian REIT Managers Association (MRMA) will continue to be active in promoting higher service standards for Malaysian real estate investment trust (M-REIT) managers.

Stewart LaBrooy

MRMA president Stewart LaBrooy in a recent interview with The Borneo Post noted that M-REITs was unique due to the fact that  it had united and formed an association which is the MRMA.

“We are the only country to have this unique association outside of the US,” he outlined.

“Part of our role is to encourage high levels of transparency and corporate governance amongst its members.

The REIT managers are engaged with their investors and run very comprehensive websites as well.” Speaking on important growth strategies to embark on in order to maintain a solid range of assets, LaBrooy believed it all boiled down to availability of new assets as well as capital availability that remained key criteria to watch.

“For some asset classes like retail malls, there is a shortage of high quality malls with good growth prospects for REIT managers to buy,” he gave as an example.

“Sometimes, they take the approach of developing their new stock internally in order to maintain the quality.

“This slows the growth – hence the focus on each REITs potential pipeline of future acquisitions.

Gan Eng Peng

“In the absence of growth through acquisition, some REITs are looking at organic growth from their current portfolios.

“With the steady growth of the retail market we are witnessing rental growth in the Mall REIT space offsetting the difficulty in acquiring new assets.

“Currently, we are witnessing a reasonable rental growth in all categories.”

Meanwhile, other specialists shared LaBrooy’s sentiment that M-REITs were on the right track.

Gan Eng Peng, head of equities of Hwang Investment Management Bhd (HwangIM), believed the performance and attitude of M-REIT managers towards investors still played a crucial role in a REIT’s success.

“Credible M-REIT managers are proactive in engaging their shareholders and communicating with them as they need the investor’s support for funding.

This benefits both parties as the funding allows REIT managers the means to buy more assets, and good quality assets add value to the share price for the investors.”

Loong Kok Wen, a property analyst with RHB Research Institute Sdn Bhd, opined, “We see a change in investors attitude towards M-REITs over the past two years.

“Previously, M-REITs are perceived as a fixed deposit-like investment.

“However, given the trend of yield compression and economic uncertainties, there is a flight for safety,” she said.

“Investors are also focusing on quality assets as liquidity is expected to drive asset reflation.

“So, we are seeing both yields and growth in asset values for REITs now.”

LaBrooy noted that every year the Asia Pacific Real Estate Association (APREA) invites real estate companies from the Asia Pacific region (as well as REITs) to submit entries for the APREA Best Practices Awards.

Since its inception in 2010, M-REITs have won the first place for the emerging markets category.

“Specifically, Axis-REIT won in 2010 and 2011 and Sunway REIT won in 2012.

“Axis- REIT won the second place in 2012,” revealed LaBrooy, who is also chief executive officer of Axis REIT.