Silver lining for S-Reits in H2 as sector ‘bottoms out’ and rate hikes ease

REAL estate investment trusts (Reits) have been pummelled by fears of rising interest rates, even as effects of the Covid-19 pandemic continue to linger.

The FTSE EPRA Nareit Developed Index, a global Reits benchmark, saw total returns slide to negative 18 per cent for the first half of 2022.

This comes as the US Federal Reserve wages war on inflation with a series of interest rate hikes.

Most recently, in June, the Fed raised the federal funds rate by 75 basis points to 1.5-1.75 per cent – its biggest hike since 1994 – which sent investors running for the hills.

The way DBS analyst Derek Tan describes it, the second quarter had been a period of “maximum fear”.

However, he believes investors should be looking to add at current prices and valuations as we move into…