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The region’s property stocks lost ground in September as risk aversion gripped investors. ahead of a US Presidential election and continued concerns that a global economic recovery remains volatile.

The GPR/APREA Composite REIT Index lost 1.4% in September, snapping a string of monthly gains since April, underperforming the wider market which declined by a smaller 1.1%.

Supported by low interest rates and higher debt capacity, the region’s REITs are turning acquisitive and resuming stalled deals. According to Real Capital Analytics, the region’s REITs expended over US$4.1 billion in acquisitions in the third quarter, after posting a record low quarterly volume in the second quarter since 2010.

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• Lockdowns and social distancing have impacted many tenant businesses, resulting in an unprecedented number of requests for rental relief, stressing real estate rental-income streams.
• For equity investors, income returns have weakened, despite softening asset values. Recent income returns may understate the full potential impact as accrual of deferred rents may mask further shortfalls.
• Lower rental incomes may also stress debt covenants and increase servicing pressures on some loans. In loans that default and are foreclosed upon, falling asset values may also increase potential loss severity.

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What’s the effect on investors when commercial tenants can’t pay their rent? For answers, we caught up with Bryan Reid, executive director on MSCI’s real estate solutions research team.

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Please find the constituents changes for the following GPR/APREA index series, which will become effective as of 21 September 2020 (start of trading):

• GPR/APREA Investable 100 Index
• GPR/APREA Investable REIT 100 Index
• GPR/APREA Composite Index
• GPR/APREA Composite REIT Index (indicated with an asterisk)

GPR/APREA Investable 100 Index

Inclusions

AUS	Waypoint REIT Limited
HKG	ESR Cayman Ltd
VNM	Yungshin Construction & Development Co

 

Exclusions

PHL	SM Prime Holdings	Liquidity too low
THA	Amata Corp PCL	Liquidity too low

 

GPR/APREA Investable REIT 100 Index

Inclusions

AUS	Centuria Industrial REIT
IND	Embassy Office Parks REIT

 

Exclusions

JAP	Healthcare & Medical Investment Corporation	Liquidity too low
SGP	SPH REIT	Liquidity too low

 

GPR/APREA Composite Index

Inclusions

AUS	AVJennings Ltd
SGP	United Hampshire US REIT *
TWN	ReaLy Development&Construction Corp

 

Exclusions

None

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