- Low but non-recessionary growth, falling Singapore Dollars base rate, safe haven flows and potential fiscal stimulus should cushion the S-REIT sector amid global volatility.
- However, given the macro headwinds, we look at the global financial crisis (GFC) cycle to examine worst-case downside to distribution.
Macro round-up
- - Read this at SGinvestors.io -
- Further, the team has lowered its 3-mth Singapore overnight rate average (SORA) projection to 2.0% for 2025, down from 2.65% at the start of the year. The team also expects a fiscal support package in 2H25 and a potential neutral stance by the Monetary Authority of Singapore (MAS) in the event of a deep technical recession.
- All in, while a slowdown is imminent, there are levers to cushion the impact.
Examining distribution downside
- - Read this at SGinvestors.io -
- Asset prices declined 11- 24%.
- Listed REITs saw distribution eroded by mid-teen to high 40% on a ~5% points fall in occupancy and dilutive capital raising to lower gearing by ~15%pt.
- A sharp fall in the Fed Funds Rate from 3Q07 could not stop the DPU and NAV declines.
Stress testing distribution
- Read more at SGinvestors.io.
