Trade tensions on global markets were evident in the performance of global banks in recent weeks. The Singapore trio of $DBS Group Holdings(D05.SI)$ $ocbc bank(O39.SI)$ $UOB(U11.SI)$ averaged declines of 1.4%. At the same time, recent US inflation data came in below expectations, with concerns about the weakening growth outlook in the US.
Despite the recent broad market downturn, Singapore real estate investment trusts (S-REITs) rebounded strongly with the iEdge S-REIT Index gaining close to 5% over the past two weeks.
Larger market capitalisation S-REITs have also led the sector’s recent gains. Within the $Straits Times Index(STI.SI)$ , the seven S-REITs averaged 5.6% gains over the past two weeks.
In the month-to-date ended March 20, the iEdge S-REIT Index recorded 4.8% in price returns, outperforming the broader Straits Times Index’s 0.9%, the FTSE EPRA Nareit Asia ex Japan REITs Index’s 3.9% and the FTSE EPRA Nareit Global REITs Index’s -3.4%t.
In the month-to-date ended March 20, the five S-REITs with the largest price gains within the iEdge S-REIT Index were $Frasers HTrust(ACV.SI)$ $Frasers L&C Tr(BUOU.SI)$ $CDL HTrust(J85.SI)$ $ParkwayLife Reit(C2PU.SI)$ $Frasers Cpt Tr(J69U.SI)$. The five S-REITs averaged 9.3% price gains.
Over the past two weeks, S-REITs also recorded net institutional inflows of about S$42 million, after close to seven consecutive weeks of net institutional outflows. The seven STI S-REITs also recorded the bulk of inflows at S$40 million of net institutional inflows. Notably, two of the seven STI REITs, $CapLand IntCom T(C38U.SI)$ $Frasers Cpt Tr(J69U.SI)$, recorded the majority of net institutional inflows.
CICT saw its FY24 (ended 31 December 2024) assets under management (AUM) grow 6% in 2024, with net property income (NPI) up 3.4% and rental reversion up 8.8% for retail and 11.1% for office. Incidentally, after eight years at the helm of CICT, the REIT’s CEO Tony Tan will move on to take on the role of Chief Corporate Officer at CapitaLand Development. He will be succeeded by CICT Deputy CEO Tan Choon Siang on 1 May 2025. For FCT, excluding the impact due to divestment of Changi City Point and the asset enhancement initiative at Tampines 1, NPI was also up 3.4% in FY24 (ended 30 September 2024), with 7.7% overall rental reversion, and AUM up 11%.
At last week's FOMC meeting, the US Federal Reserve maintained interest rates at 4.25% to 4.5%. Given increased economic uncertainty, the Fed lowered its growth forecast for 2025 and raised the inflation projection. Additionally, it still anticipates two rate cuts this year.
Analysts are also issuing more favourable comments on REITs in the past week. DBS Research notes that interest rates in Singapore have retreated, with the SORA and 10-year yields hitting a “Goldilocks zone” for S-REITs to refinance with savings and pursue selective growth. S-REITs are today still trading at compelling valuations, with the sector’s average distribution yield of nearly 7% and price to book ratio of below 0.8x, 20% below its historical average.
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