Dexus, Charter Hall Long WALE REIT Face Steeper Rise in Rates from FY28

Dow Jones07:19

2313 GMT [Dow Jones]--With Australian interest rates at an 18-year high, Morgan Stanley assesses which property companies face the steepest rise in debt costs. Analyst Simon Chan says Dexus and Charter Hall Long WALE REIT could have a larger step-up in rates compared to their peers come FY28. That's because they have a low starting point. "For instance, Dexus/Charter Hall Long WALE REIT's hedged rate in FY27 is 3%, and a respective 24%/36% of their debt will incur a base rate of potentially 4.85% at least for part of FY28 (as hedging rolls off)," MS says. In contrast, HomeCo Daily Needs REIT and HealthCo Healthcare & Wellness REIT have hedged rates of 3.9% and 4.4%, respectively, in FY27. So, the expense headwind should be more muted even as hedging rolls off in FY28, MS says.

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