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25% vs 33% gearing? its not that large a gap between Sabana and CIT with not much room with for Sabana (just 100+ million more debt to get to the same level as CIT) to achieve diversification by taking on more loans to buy assets. As things stand now, CIT is more diversified than Sabana.
by the way, homeowners routinely take massive leverage (4 to 1).
The difference is that homeowners generally take a long term loan with the intention of paying it off fully, while reits take shorter term loans with the intention of refinancing it. Its the refinancing risk that's the killer, not the high level of leverage per se.
Actually, you want diversification? Just own shares of both reits lah!
by the way, homeowners routinely take massive leverage (4 to 1).
The difference is that homeowners generally take a long term loan with the intention of paying it off fully, while reits take shorter term loans with the intention of refinancing it. Its the refinancing risk that's the killer, not the high level of leverage per se.
Actually, you want diversification? Just own shares of both reits lah!