More adverse news for S-REITs are in store. According to JP Morgan, about a month ago, the Singapore swap curve – which was being inverted, thus enabling REITs to refinance debt at 3% - has resorted to its flattening form and REITs will only be able refinance debt at the mid- to high 4%. “In the event of further flattening of SG yield curve, there are further downside risks to our DPU estimates,” JP Morgan says.
JP Morgan, in an update on Mar 5, expects S-REITs to stay lower for longer due to stubbornly high inflation prints.
“With the latest US inflation prints, the S-REIT rally has been pushed out to July to September with the Fed funds rate expected to peak at 5.4%-5.5% versus 5% previously,” the JP Morgan report says.
