AFTER taking a pause at the June Federal Open Market Committee (FOMC) meeting, the US Federal Reserve last Thursday (Jun 29) signalled that more rate hikes may come in a bid to curb inflation.

The month of June (till Jun 28, 2023) saw the iEdge S-Reit index record flattish performance at 0.3 per cent total returns for the month, improving from the 3.0 per cent declines in May.

S-Reits were not the only laggards during the month, with the FTSE EPRA Nareit Asia ex Japan Index declining 0.5 per cent in total returns.

In terms of net fund flows over the month, retail investors net bought S$100 million of S-Reits while institutional investors continued to net sell S$112 million in the sector.

Despite S-Reit’s flattish performance in June, 18 out of 35 S-Reits within the iEdge S-Reits Index outperformed the sector’s benchmark.

The 10 best performing S-Reits for the month of June (till Jun 28, 2023) averaged over 7 per cent in total returns. These were Lippo Malls Indonesia Retail Trust, Digital Core REIT, ParkwayLife REIT, EC World REIT, CapitaLand India Trust, Daiwa House Logistics Trust, Keppel DC REIT, CDL Hospitality Trusts, Far East Hospitality Trust, and ESR-LOGOS REIT.

Lippo Malls Indonesia Retail Trust in its Q1 2023 results updated that despite lower revenue and net property income, it sees stable operating performance across its 29 retail assets as Indonesia lifted all remaining Covid-19 restrictions at the end of 2022.

Overall portfolio shopper traffic in Q1 2023 has recovered to 67.7 per cent of pre-Covid levels.

Active management of tenant mix and lease renewals saw the renewal of 78.9 per cent of expired leases in Q1 2023 at a positive rental reversion of 3.0 per cent.

The Reit’s leverage ratio also dropped to 42.9 per cent compared to end 2022.

Digital Core Reit announced earlier in the month that its second-largest customer, a global colocation and interconnection provider has filed for bankruptcy.

This customer represented about 22.4 per cent of annualised rent and is deployed across six data centres representing 26.6 per cent of total portfolio value.

Digital Core Reit said that its distribution per unit (DPU) could fall by 2 US cents, assuming all annual revenue were to be eliminated.

However, the manager is expecting to be able to minimise any potential DPU impact and maintain or enhance long-term value and returns for the Reit’s unitholders.

ParkwayLife Reit reported 21.7 per cent higher year-on-year gross revenue in Q1 2023, driven by higher rent from Singapore hospitals and additional revenue from the five nursing home properties acquired in September 2022.

Its DPU for Q1 2023 grew 2.5 per cent to 3.65 Singapore cents and will form part of the H1 2023 distribution when the Reit announces its H1 2023 results. SGX RESEARCH

REIT Watch is a weekly column on The Business Times, read the original version.