Inconsistencies in rental revision computation may give investor an over-optimistic or pessimistic impression of the property situation as well as manager’s ability.
Recently, Prime Grade A focused commercial REIT
Keppel REIT (
dividend yield 6.3%) made an annoucement regarding the way they compute their rent reversion.
Rent Reversion
Underlying REITs are different properties that the REIT rent out. These lease terms could range from short of 1 year to as long as 20 year (for some of Keppel REIT’s Australian properties for example). When the term expire, the tenant and the landlord have to negotiate for a new rent for the renewal, and other details such as how long to rent for, incentives, and other terms.
During
good times, when there is
limited supply and booming demand, the rent reversion can be high
positive. During
bad times, where there is
more supply and demand is ......