S-REITs Earnings: Will You Add More Before Rate Cut?
This week marks the earnings week for Singapore REITs.
$ParkwayLife Reit(C2PU.SI)$ will report business update for Q3 FY2024 on 2024/10/16. $Keppel DC Reit(AJBU.SI)$ and $Sabana Reit(M1GU.SI)$ will release business update for Q3 FY2024 on 2024/10/18.
Healthcare vs. Data center REITs: Which one is your pick?
1. $ParkwayLife Reit(C2PU.SI)$ is one of Asia's largest healthcare REITs, focusing on income-producing real estate for healthcare purposes.
In July, the hospital and nursing-home landlord announced a 3.5% rise in first-half distribution per unit. But revenue fell 2.7% because of the depreciation of the Japanese yen. Following the last earnings report, Parkway has risen by 14%.
2. $Keppel DC Reit(AJBU.SI)$ is Asia's first pure-play data center REIT. It invests in income-producing real estate primarily for data centre use, supporting the digital economy.
It has grown its assets under management by almost four times, from S$1.1 billion as at end-2015 to S$3.7 billion as at the end of 2023. Keppel DC has increased by 20% this year.
In the recent H1 earnings report, Keppel's DPU fell by 9.9% due to rising finance costs, and the depreciation of the Singapore dollar.
However, this drop in DPU was partially offset by revenue growth, with the stock rising by 13% after the earnings report. Revenue for the first half grew by 11.9%, reaching S$157.2 million.
Benefit from rate cut or not? Analysts warned delayed positive impact due to fixed-rate debt.
The market believes that a rate cut by the Federal Reserve will benefit REITs.
However, some analysts argue that this earnings report may not show much positive impact because most REITs have debts pegged to fixed interest rates. The benefits of a rate cut may not truly reflect in earnings reports until 2025.
If any company sees a significant drop in its stock price after this earnings report, would that present a buying opportunity?
Would you consider buying more REITs before the rate cut?
Which REIT is your favorite, and why?
Do you hold any other S-REITs?
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