Rising interest rates: Which SREIT will be the biggest loser?

The DPU of an industrial REIT is expected to drop 15.0% in 2023.

Whilst real estate is a hedge against inflationary pressure, UOB Kay Hian said SREITs are not yet out of the woods from the possible impact of the Fed's intense rate hike.

According to the analyst, interest rates in Singapore have moved up accordingly with Fed, and by end-22 and end-23, the latter's Funds Rate would hit 3.4% and 3.8%, respectively.

Out of the 20 REITs covered by UOB Kay Hian, the analyst said Digital Core REIT(DCREIT) would be most affected by the rate hikes in terms of dividends per share (DPS).

As per the analyst estimate, DCREIT's DPU will drop 15.0% to $0.0401 in FY23.

"DCREIT has maintained the proportion of borrowings hedged to fixed rates at 50%, which means the remaining half of its borrowings are exposed to higher US interest rates," the analyst explained.

Apart from its DPU, the REIT's cost of debts will also be affected by the rate hikes and is expected to increase from 2.1% to 3.6% in 2023.

Another SREIT which has a low proportion of borrowing on fixed rates is Suntec REIT (SUN) with 51%. SUN's DPU is expected to fall by 4.8% to $0.0957 in FY23.

SREITs like CapitaLand Integrated Commercial Trust (CICT), Keppel Pacific Oak US REIT (KORE), and Manulife REIT (MUST), on the other hand, have a high proportion of their borrowing on fixed rates of 85%, 84.2% and 86.5%, respectively.

Follow the link s for more news on

CapitaLand

UOB

Real estate investment trust

If you've been wondering whether SBR could work for your company — yes, probably.

A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you? The answer is usually yes. The shape of it depends on what you're trying to do.

The options are broader than most people assume — thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. Some partners use one channel; most use a mix. We figure out the right combination by starting with your brief, not with our rate card.

So if the question has been on your mind, here's the easy way to ask it.

We'll tell you honestly whether we can help, and how. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia