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Mall Closures To Put A Dent On REIT Earnings (The Malaysian Reserve)

October 13, 2020 – THE spread of Covid-19 infections and enforcement of controlled movement are set to impact shopping malls and likely dent earnings for real estate investment trusts (REITs) for the current quarter, analysts said.

Hong Leong Investment Bank Bhd (HLIB) research analyst Nazira Abdullah said tenant sales would be affected by the drop in footfall at malls which have to shutter upon the confirmation of a positive Covid-19 case.

“If malls are impacted by targeted lockdowns or closures due to new clusters found, REIT managers may be inclined to help their tenants out via rental rebates, putting a dent to REITs’ earnings.

“Hotels, too, will be negatively hit as the short-lived pent-up demand for domestic tourism takes a backseat,” she told The Malaysian Reserve (TMR) in an email reply.

1 Utama Shopping Complex was ordered to close from Oct 11 by the Selangor state government, after four Covid-19 cases were discovered on its premises.

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