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Impact of Trump’s tariffs, interest costs in focus as S-Reits report Q1 earnings

by Yurie Miyazawa
in Leadership
Impact of Trump’s tariffs, interest costs in focus as S-Reits report Q1 earnings
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[SINGAPORE] Market watchers will be looking for managers of Singapore-listed real estate investment trusts (S-Reits) to shed light on their strategies to address the impact of potential US tariffs in their upcoming financial results.

US President Donald Trump’s proposed tariffs on global goods have wreaked havoc on markets, including a sell-off of S-Reits last week. With the likelihood of a global recession looming, analysts told The Business Times they will be paying attention to S-Reits’ guidance in light of recent geopolitical events.

“We would be more keenly watching out for their outlook statements and how individual S-Reits are navigating or being impacted in light of significantly worse tariff policies, and steps taken to mitigate the impact to their bottom lines,” said Vijay Natarajan, an analyst with RHB Bank.

He believes the increased likelihood of a recession will result in higher vacancy rates and lower – or even negative – rental growth. This, in turn, will reduce the top-line growth prospects for S-Reits.

The reporting season for S-Reits kicks off on Tuesday (Apr 15) with Sabana Industrial Reit reporting its Q1 business update after market close. This will be followed by Keppel Pacific Oak US Reit and Keppel DC Reit on Apr 17.

More counters will report their Q1 business updates the following week, including Suntec Reit on Apr 24, CapitaLand Integrated Commercial Trust on Apr 25 and CDL Hospitality Trusts on Apr 30.

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S-Reits under the Frasers and Mapletree groups will be reporting their half-year and full-year results respectively. Mapletree Industrial Trust (MIT) will report its FY2025 results on Apr 30 while Frasers Hospitality Trust will report its H1 results on May 6.

Hospitality and retail sectors

Analysts will be closely observing the Q1 financial performance of the hospitality and retail sectors.

“Certain segments are likely to be more vulnerable as a result of slower economic growth and consumer demand, and this includes retail and hotel S-Reits,” said Carmen Lee, head of OCBC investment research.

Darren Chan, senior research analyst at Phillip Securities, noted that hospitality S-Reits received a boost in Q1 2024 due to major events such as concerts.

“Without similar large-scale events in Q1 2025, organic demand recovery – particularly from business and regional travel – will serve as a more meaningful gauge of the sector’s resilience,” said Chan.

Meanwhile, analysts are optimistic about retail S-Reits.

Chan believes the sector will outperform due to demand for prime retail space amid tight supply. Similarly, Macquarie Equity Research said in a note on Apr 9 that it expects retail S-Reits to report positive tenant sales trends for Q1, in line with strong overall retail sales.

Interest costs

Analysts are also tracking S-Reits’ guidance on their average cost of debt, with interest rates going down since last year.

Macquarie expects some S-Reits to report “marginally lower” average interest costs for Q1 in view of the lower interest rates.

Its analysts will also be looking out for S-Reits’ guidance on their average cost of debt for FY2025 and FY2026, especially now that most will be refinancing their loans. S-Reits’ average cost of debt stood at 3.4 per cent in December 2024.

Similarly, RHB’s Natarajan expects the majority of S-Reits to post either a flat or slight decline in interest costs in their latest results.

He noted that the Singapore Overnight Rate Average, which is the benchmark for Singapore interest rates, has seen a sharp decline of more than 40 basis points since the start of 2025.

“This should translate directly into lower cost for floating rate debt and benefit S-Reits with a higher proportion of floating rate debt, such as CDL Hospitality Trusts, Far East Hospitality Trust and Suntec Reit,” he added.

DPU to rise

Overall, analysts expect most S-Reits to report a slight increase in distributions per unit (DPU) for Q1, compared to last year in view of lower interest rates.

For S-Reits reporting half and full-year results, Natarajan said he expects continued top-line growth, although their DPU performance will be a “mixed bag” amid financing cost pressures and foreign exchange losses.

With Singapore asset valuations expected to remain stable or rise slightly, Macquarie anticipates that Frasers Centrepoint Trust (FCT), whose assets are mostly suburban malls, will deliver a “slightly better” DPU for H1. FCT reported a DPU of S$0.06022 during the same period last year.

Tags: CostsEarningsFocusImpactInterestReportSReitsTariffsTrumps
Yurie Miyazawa

Yurie Miyazawa

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