Risk
Master Leases
Has short master leases expiring in 2020. This give an uncertainly to the Reits as it affects about 20% of DPU. However, impacted properties are leased to subsidiaries of the sponsor, so does that means that master lease can be renew. But still a positive or negative rental revision is unknow. Without master leases, current yield will drop from 8.6% to 7.1%
Short lease hold
Average leasehold of 39 years. Most reports pointed this out. 39 years is longer than most SG industrial Reit of 30 years. 39 years, I may already divested or dead.
InOrganic Growth
2 ROFR properties and properties from YCH to be acquired in phases via debt & equity. Expects rights issues. Risk is that it is uncertain if acquisition is accretive as the management purse growth.
Positive
Partnership with YCH/Expansion to South East Asia(SEA) & India
Currently, there is no Reits listed at SGX with properties in SEA other than First Reits in Indonesia. Expansion to SEA in related Belt and Road Initiative to ride on the growth of E-commence of the region.
Conclusion
A currently yield of 8.6% looks yummy but there are a lot of uncertainties. And of the 7 properties, only 3 are for E-commerce use. For a piece of mind, better not be getting ECW unless one wants to bet on the SEA/India expansion and ride on China's E-commerce growth.
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