Monday, October 13, 2008

Why Reits are faring so Badly!

MapleLog (Current Assets lesser than Current Liabilities)
Macarther reit (Current Assets lesser than Current Liabilities)
K-reit(Currenct Assets lesser than Current Liabilities)
MPREIT ( This one i dont know why they dont seperate Current from Non Current. Why?Why? Why?Why Reits are faring so badly? Cos its a credit crunch and they need to borrow money and a random pick of some Reits in singapore tells the story. And does anyone know why MPReit doesn't seperate currenct from non current? Hmm


  1. You correctly point out the reason for the dismal performance of the REIT is credit crunch, but I feel that looking at CA vs. CL for REIT is not realistic, as these firms are by the nature of the business and setup light on current assets. They are required by law to distribute most of their income, thus the low cash position.

    What's crucial here is how uch of the funding needs is short-term vs. long-term. Are they matching their rental income with interest liabilities?

    Anyhow, great post.

  2. hi Zhuangzi,

    I did a check and found that yes you are right, that Singapore reits are required to distribute at least 90% of their taxable income . This accounts for their low cash position and therefore,since cash is part of CA, looking at CA vs CL might not be as useful for this kind of entities as compared with say a manufacturing firm for example.

    Having said that..i did find a couple of reits which, surprisingly have their CAs > than their CL.

    Will put them in a later post.. :)

  3. one reason for hi CL for a particular year is when a portion of outstanding debt becomes "current": to be repaid within 1yr.

    this amt is moved from "non-current liabilities" to "current liabilities" as the loaned amt comes due.

    the debt maturities can be found in the footnotes to the balance sheet.