Global Reits rallied over 15 per cent in the fourth quarter of 2023, following expectations that interest rates could be entering a downcycle in the new year.

The iEdge S-Reit Index rebounded close to 20 per cent in total returns from its lows in end October, and closed the year in the green with 2023 total returns at 6.6 per cent. Comparatively, the FTSE EPRA Nareit Asia ex Japan Index and the FTSE EPRA Nareit Developed Index ended the year at 0.8 per cent and 9.0 per cent total returns respectively.

As mentioned in the last weekly Reit Watch, the iEdge S-Reit Index recorded its best-ever month at 9 per cent in December 2023, beating its previous record of 8.6 per cent in April 2020. Much of this was driven by optimism in the sector after the US Federal Reserve had pivoted towards a more dovish stance and even signalled that it will cut rates in 2024.

Specialised S-Reits were the best performing sub-industry at 19.4 per cent total returns, followed by industrial and healthcare S-Reits at 11.3 per cent and 7.1 per cent respectively. Digital Core Reit was the best performing S-Reit at 23.3 per cent total returns.

On its current unit buyback mandate, Digital Core Reit Management has repurchased 0.58 per cent of the units in Digital Core Reit. The preceding year saw 0.98 per cent of the issued units repurchased. Digital Core Reit Management maintained last year that the timing of these purchases was dependent on the daily unit trading prices. The manager also added that it believed that buying its own assets in the public market at a meaningful discount to intrinsic value represents a unique opportunity to create value for unitholders.

In terms of fund flows for the S-Reit sector in 2023, institutional investors recorded net outflows of S$976 million while retail investors recorded net inflows of S$790 million. Retail investors continued to net buy the sector, after accumulating net retail inflows of S$1.5 billion in 2022.

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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