How sustainable is the retail Reit model?

WHEN the first Singapore real estate investment trust (S-Reit), CapitaLand Mall Trust (CMT), was floated nearly 18 years ago, it soon became a stock market darling - rewarding unitholders with not only regular distributions from rental income but also attractive appreciation in unit prices.

There are some questions now, however, as to how sustainable the concept of a retail Reit is, as a vehicle for owning malls. Sentiment has been moving in this direction for some time. But with the Covid-19 outbreak, things have come to a head for retail Reits and their tenants. Even when the pandemic ends, the sea change affecting Singapore's retailers will persist.

To put things in perspective, the introduction of Reits in Singapore has resulted in improvements on several fronts.