Interest Rate impact

Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
  • #13769

    Francis Lee


    I would like to know the impact of interest rate increase on the dividend from S reit ETF.

    Currently the dividend yield for S Reit is approximately 5.75% pa. what would be the yield if interest rate increase by 1% assuming that the Reits managers have not lock in the rate with the Banks.

    thank you


    Research Department

    Hi Francis,

    Thank you for engaging us on Stocksbnb. Using the individual REITs under our coverage as a proxy, for a 100bps increase in interest rate,DPU will decrease 1-3% based on current interest rate hedging status and 8-12% if assume totally unhedged. Of course this is assuming zero income growth.

    Using a hypothetical example of a REIT w S$100mn assets, assuming NPI yield of 5.75% and gearing of 35% (S-REIT average), average cost of debt 3% (S-REIT average), you could be looking at net income ard S$4. 1% increase in IR would then increase financing costs by $0.35, which works out to about c.9% impact on net income.

    If your S-REIT is yielding 5.75% now, a 10% impact would bring yield to about 5.2%.

    Hope this helps. Thanks


    Francis Lee

    Awesome ..thanks for your help !!!

Viewing 3 posts - 1 through 3 (of 3 total)

You must be logged in to reply to this topic.

Get access to all the latest market news, reports, technical analysis
by signing up for a free account today!