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.

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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.

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