Ride the S-Reits revival via market leaders CICT and CapitaLand Ascendas Reit
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RISING interest rates have roiled real estate investment trusts (Reits). Higher borrowing costs hurt distribution per unit (DPU). Some property values fell because higher capitalisation rates were used in valuation.
Meanwhile, unit prices of Reits declined as investors applied higher discount rates to value future earnings of the trusts or demanded higher yields.
Reits could be a key beneficiary when interest rates soften. An individual parking money in Singapore dollar fixed deposits and Treasury bills (T-bills) will have to find other yield instruments as deposit rates and T-bill yields fall.
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