Rising interest rates no threat to Singapore industrial REITs, says Maybank Kim Eng

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Interest rates may be set to rise in the near term globally, but they are unlikely to pose any immediate threats to Singapore-listed industrial REITs, says Maybank Kim Eng in an investment report issued on 22 June.

The brokerage firm noted that there is still strong investor demand for yield, and ample liquidity in the market, as reflected by the robust demand for perpetual securities, whose issuances grew by 115% year-on-year in the year-to-date (YTD) to SGD3.4 billion.

Average borrowing costs for Singapore industrial REITs are also already relatively low at 3.4%, and 2.3-3.0% for the larger caps REITs in the sector, said Maybank Kim Eng.

“On average only 3.4% and 21.8% of total debt is up for renewal in 2017 and 2018 [respectively]”, the firm added.

Against the backdrop of these developments, Maybank Kim Eng opines that Singapore’s industrial REITs are poised for further acquisitions in the second half of 2017.

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Ridzwan Rahmat has been analysing Singapore-listed REITs and business trusts, since 2008. For disclosure purposes, Ridzwan is currently vested in Mapletree Greater China Commercial Trust, Mapletree Industrial REIT and Mapletree Logistics Trust.

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