There are a few issues with this REIT, the top two being the renewal of leases and weak sponsor.
Well, there is nothing we can do about the sponsor but I think that has been priced in.
as for renewal of leases, in order not to appear talking in hindsight, I decided to blog about it now. It should not resulted in significant fall in revenue, definitely less than the 7.2 % projected regardless of expiry of leases. There are sub tenants in the leases, so to become multi- tenant are a non issue. It will be an issue if Ye anchor tenant are movin out together with the expiry of master lease, that is highly unlikely too since there is no reason to negotiate till the eleventh hour if this is such the case, there should be confirmation of non-renewal as it takes time to find another tenant.
if negotiation is going on tough, is it going to be bad deal for shareholders or tenants. Half of the leases have no build in positive rent adjustment, while industry rent are beginning to fall, there is no cases of negative renewal of rents from other industry reits, and given the low base of rent 3 years ago, net net sabana should get a better deal.
3 more months and we shall see if I am right