Thoughts about REITs

I read the article recently about commercial tenants and restaurants being able to hold off paying rent for 6 months if they are unable to do so. So the proposed piece of legislation means that tenants can defer their payments after 6 months. Although I am fairly confident of a good recovery then, I think it will be bad in the short term. In this outbreak, it is pretty likely that most tenants are unable to meet their rental obligations and they will use this to better manage their cashflow.

Therefore, unless the government comes in to fill this gap by supporting REITs, if REITs are forced to swallow this bitter pill, I think the hit in the short term would be pretty bad.

So far the movement of REITs is quite close to STI but it might deviate towards lower grounds. I am guessing REITs might start to raise cash through new debt or new issuance of units. Either way, not gonna be good in the interim, but nevertheless a good long term bet.