“Risk” is the possibility of any unwanted incidents occurred, it may affect some goals or some objectives in the future, and it may also fail any operation plans after the goals set. Risk assessment analysis for the possible Impact and kikelihood must be done.
“Risk Factor” is the important cause or reason that may increase the risk of failure in some business after the goals set, it cannot be expected where, when, how and why that happens. Any specific risk factors must be the real causes concerned, so risk assessment and analysis will be arranged efficiently in order to later minimize all risk possibilities.
Risk Factor of “REIT”
Before making any investments, we know very well these sentences “Investments contain risks, Investors are advised to study all necessary information in the prospectus before making investment”, there is also no exception for “REIT” investment. Risk is the most influential factor, but it is often neglected. Thus, PROSPECT RM would emphasize the importance of risk factors of the REIT that may be summarized as follows;
- Increased competition may impact the finding tenants, occupancy rates, rental rates, and renewal.
- In the case, REIT has anchor tenants, losing these tenants may significantly alter the REIT's income.
- In the case, REIT invests in leasehold properties, the value of which decreases over the remaining lease period.
- REIT management depends on the top management and personnel with expertise in REIT management, and real estate management.
- Political and economic changes, both domestic and international, as well as factors from natural disasters, floods, and acts of terrorism.
- Rising interest rates may lead to increased expenses if the REIT has borrowings.
- Accounting standards in Thailand or related laws may change.
- The price of trust units may fluctuate according to market conditions.