REIT Unit Buybacks has been a recent topic of debate.
In Hong Kong, Link REIT created minor controversy in 2018 by buying back units from the open market to boost DPUs to existing shareholders following the sale of some of its properties.
Closer to home, Keppel REIT initiated the first unit buyback programme among all the S-REITs in Singapore. They have also been quite active in exercising their buyback mandate in the market in recent months.
Lastly, I recently received the notice for AGM for Capitaland Mall Trust in the mail. I read through the document and was mildly surprised to see that there was a tabled ordinary resolution as follows:
Apparently CMT had a REIT buyback mandate since 2013, which they have not exercised yet.
So does it make sense for a REIT to perform unit buybacks? Let’s explore this today.
What are share buybacks?
Let’s begin by