S-Reits earnings, DPU likely to decline in Q3 despite interest rate cut

HIGHER interest costs are expected to continue weighing down the earnings and distribution per unit (DPU) of Singapore-listed real estate investment trusts (S-Reits) in the last quarter, despite the US Federal Reserve cutting interest rates for the first time in more than four years last month.

Analysts say that the sector’s DPUs are likely to “stay flat” or even contract, given that most S-Reits have their debts pegged to fixed interest rates. It will also take time for lower interest rates to have a positive effect on their earnings.

They expect S-Reits earnings to pick up in the second half of FY2025 instead.