Investors should not avoid Reits over fears of dilutive equity raisings

[SINGAPORE] More stable interest rates should bring much cheer to real estate investment trusts (Reits).

All things being equal, a Reit’s distributable income rises when borrowing costs decline. Also, as low-risk alternatives such as Singapore dollar fixed deposits or Treasury bills (T-bills) issued by the Singapore government begin to offer less attractive returns, yield-driven investors may increasingly have to look at Reits. 

The cut-off yield for the latest six-month T-bill issued on May 13 was 2.3 per cent per annum, substantially below the 3.7 per cent per annum of the six-month T-bill issued on May 14, 2024.