- S-REITs are projected to enter a two-year sustained earnings upgrade cycle through 2026-2027. Despite the anticipated end of the current FED cut cycle, S-REITs will still benefit from the 3M SORA anchoring at 1.2%-1.3%, significantly below recent levels.
- This is expected to drive a 2.5% uplift in DPUs, which we believe is not yet fully priced in, leading to improved net property income and distributable income, and subsequent upgrades to internal projections and market consensus forecasts.
S-REITs to benefit from refinancing savings.
- - Read this at SGinvestors.io -
- For the key overseas markets where S-REITs have invested – namely Australia, HK, UK, and USA – we observe that the key benchmark rates have also declined. This implies lower overall financing pressures; however, the savings are likely to be more marginal compared to those from SG loans.
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- We expect the overall cost of debt for S-REITs to decrease heading into 2026, as they refinancing expiring debt throughout the year. This will be aided by the continued benefit of lower floating rates (q-o-q basis). While selected S-REITs might still experience interest savings being offset by the unwinding of inexpensive interest rate swaps entered into during 2020-2021, this is anticipated to be less of a hurdle as these agreements mature into 2H26 and beyond.
Who benefits more?
- Read more at SGinvestors.io.
