Paltry dividends? Reits may go out of favour among investors

RETAIL Reit investors are going through tumultuous times. This time, it is not refinancing jitters as was the case during the 2008-09 financial crisis. The issue now hits at the very core of a Reit's existence - collecting rentals from tenants and distributing it to investors as dividends.

Tenants have always griped about unrealistic rentals in a Reit-dominated market; now, as many of their businesses have been brought to a standstill by the Covid-19 crisis, they expect rental moratoriums, rebates and waivers. Government sympathy so far seems to be with the tenants.

Reit managers have been silent throughout this episode. SPH Reit - so far the only one to report its Q1 earnings - cut its distributions by 77 per cent without any clear explanation, shocking investors and setting a dangerous precedent.