MCO to hit REITs

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KUALA LUMPUR – Malaysian real estate investment trusts (MREIT) are expected to take a hit as steep as 14% decline in earnings as investors dump stocks in a rush to liquidate in a effort to weather the storm in the markets.

The movement control order’s impact were also felt on rental payments among tenants as well as extending the lockdown beyond March.

“It is still in early stages. Stakeholders are not so worried about the two weeks [of the MCO implementation until the end of March] compared with the possibility of an extension,” said the analyst.

“We are cutting the MREITs’ FY20-22E EPU by 3-14%,” Affin Hwang Capital research reports on Monday.

However, Affin Hwang said that recovery are expected in 2021 but the outlook may yield of 5.6% has led it to downgrade the sector to neutral from overweight.

Movement control order also affected retailers in Malaysia as the government temporarily shuts down non essential business premises for two weeks to avoild the spread of the virus. For essential supplies and services shops, we are expected to see lower spending forcast during this period.

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