Amid high interest rates, Reits may want to forgo acquisitions for organic growth instead

PRICES of real estate investment trusts (Reits) have been battered by rising interest rates. And the acquisition growth engine has slowed substantially for many acquisitive trusts. But prospects are not all bleak for Singapore’s Reits. 

In 2021, Mapletree Industrial Trust (MIT) significantly scaled up its data centre presence with a US$1.32 billion portfolio acquisition of 29 data centres in the United States. To help fund this acquisition, the trust completed an S$823.3 million equity fund-raising exercise. 

MIT is posting decent results: for the six months ended Sep 30, 2022, net property income and distribution per unit (DPU) rose 15.6 per cent and 0.4 per cent, respectively, from a year ago. Yet MIT, like many other Reits and business trusts, has been much less acquisitive recently.