Asia’s listed real estate investment trust industry, is experiencing its worst period since it arrived at the start of the decade.
While listed property trusts have existed in Australia since the 1970s, the REIT industry expanded across the Asia-Pacific region after 2001 following the passing of specific legislation in Japan, Singapore and Hong Kong.
The Reits quickly attracted billions of dollars from pension fund investors, in search of stable companies with predictable income streams – and the bonus of likely capital appreciation. The average dividend yields of Reits in many countries consistently exceeded those on government bonds.
The past few months have been anything but stable for the region’s Reit industry, which has been affected by the credit crunch, falling stock and asset prices, and the cancellation of several planned initial public offerings by trust sponsors.
Robert Zulkoski, head of Asian real estate investing at Oaktree, a US investment fund, says: 'The Reit industry is going through an inflection point in Asia. Some smaller and mid-sized Reits are having their business models questioned in this market, where it is harder to both raise equity and debt.'
In Japan, the combined market capitalisation of its 42 J-Reits fell 26% to $34.1bn in the year to September 1, according to the Asian Public Real Estate Association, a lobby group.