The iEdge S-Reit Index, barometer for the Singapore Reits and property trusts sector, gained 2.6 per cent in the first four sessions of the week starting Oct 9.

This followed a global rally across the week, despite concerns over the Israel-Hamas conflict, driven by investor optimism over the Federal Reserve’s dovish comments as signs pointed to the central bank backing away from a November hike.

On Thursday night (Oct 12), the US Consumer Price Index (CPI) came in slightly higher than markets had anticipated, leading to higher expectations that the Federal Reserve will likely implement one more interest rate hike before the year ends.

Assessment by the CME FedWatch Tool showed that markets’ expectation of a rate hike in December increased to 31 per cent on Friday, up from 26 per cent the day before.

Accordingly, the iEdge S-Reit Index opened 1 per cent lower on Friday morning.

From a yield perspective, the iEdge S-Reit Index’s dividend yield stands at 6.6 per cent, above MAS’ 10-year government bond yield of 3.3 per cent.

Across last week up till Thursday’s close, 31 out of the 40 listed S-Reits and property trusts were in the green, led by Digital Core Reit’s 8.7 per cent gains.

This added to its 16.7 per cent gains since the start of July.

Within the STI, top performers for the first four sessions of the week were dominated by Reits: CapitaLand Integrated Commercial Trust (+4.0 per cent price gains), Mapletree Logistics Trust (+3.9 per cent), Frasers Logistics & Commercial Trust (+3.8 per cent) and Mapletree Pan Asia Commercial Trust (+3.7 per cent).

In terms of fund flows across the same period, while the sector saw S$15 million of institutional net outflows, it recorded close to S$3 million of retail net inflows.

Three trusts received net inflows from both institutional and retail investor segments.

They were Frasers Logistics & Commercial Trust, CapitaLand India Trust and Starhill Global Reit.

Looking ahead, attention will be on the third quarter earnings reports, with focus on the balance sheet resilience of the sector amid expectations of a higher-for-longer rate environment as well as the ability to distribute income to investors.

Based on data extracted from the September 2023 S-Reits & Property Trusts Chartbook, the average gearing ratio of the sector stands at 38.2 per cent, below the regulatory limit of 50 per cent (or 45 per cent if the Reit’s adjusted interest coverage ratio is below 2.5 times).

The three S-Reits with the lowest gearing ratios are: Sasseur Reit (26.2 per cent), Frasers Logistics & Commercial Trust (28.6 per cent) and Paragon Reit (29.8 per cent).

During the week starting Oct 16, Keppel DC Reit, Keppel Reit and Keppel Pacific Oak US Reit will be reporting their quarterly business updates.

In the following week, close to 10 other Reits are due to report as well.

Source: SGX Research S-Reits & Property Trusts Chartbook.

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

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