“REIT prices were quite badly impacted,” notes Gerard Yuen, CEO of UHU REIT’s manager, referring to the interest rate cycle. REITs’ unit prices are based on a spread between distributions per unit (DPU) yield and risk-free rates. The higher the risk-free rates, the lower the unit prices.
As of Jan 21, United Hampshire US REIT (SGX:ODBU
) (UHU REIT) has risen by 10.7% over the past 12 months, matching the FTSE REIT Index’s gain over the same period. The REIT is up 16% since Liberation Day, trailing the FTSE REIT Index’s 22.2% gain.
REITs’ unit prices and their cost of debt, the largest operating expense item for S-REITs, are affected by interest rates. From 2022 to 2024, US interest rates rose by an unprecedented 5%, from near zero to 5.25%–5.5% at the start of 2024.
