REIT Symposium 2018 – Are S-REITs ready for the intensifying rate hikes? May 22, 2018
This was the presentation slides presented during REITs Symposium held at Suntec on 19 May 2018.
Interest rate hikes a headwind, but rate hikes with accompanying economic growth is not a worry.
S-REITs returned a CAGR of 26.5% during last rate hike cycle from 2004-06.
Domestic economy gaining momentum, 4.3% in 1Q18 outpacing previous quarter. Though not expected to reach levels seen during last rate hike cycle, still a possible catalyst for further yield spread compression.
Do not believe will see dramatic rise in inflation with velocity of money still at multi-year lows.
SG interest rates climbing across all tenures – up 35-50bps since start 2018.
Markets already pricing in interest rate hikes.
Relative strength of SGD will be plus for sector – SGD rates could rise slower than US rates.
Long-term performance of S-REIT asset classes comparable with residential prices.
Positive on Office and Hospitality subsectors.
About the author
Tan Dehong Investment Analyst Phillip Securities Research Pte Ltd
Dehong covers primarily the REITs and property developer sector. He has close to 7 years experience in equities related dealing and research roles.
He graduated with a Masters of Science in Applied Finance from SMU and Bachelors of Accountancy from NTU.