Thursday, March 15, 2012

Reit's first perpetual bond sale may spur others to follow

Straits Times: Tue, Mar 13
THE success of Mapletree Logistics Trust (MLT) in raising $350 million by selling perpetual bonds last week has spurred hopes that other real estate investment trusts (Reits) may follow suit.

But some analysts worry MLT may be paying too much for the borrowed money at 5.375 per cent a year, and will not be able to better that rate in returns from the assets it buys with the funds.

Perpetual bonds, as the name suggests, do not have to be redeemed by a certain date. But like other bonds, they pay a coupon rate, or annual interest payout to investors. Analysts believe perpetual bonds may be especially rewarding for Reits trading at a discount to their book value, or the total market value by share price, or unit price in the case of Reits...

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Martin Koh/ Sherry Tang
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