Singapore S‑REIT Pulse #02 — SORA Outlook & REIT Impact
My kopi tasted sweeter when the SORA slipped further!
As it eases more, we may see increased tailwind for the SREIT sector. Lower borrowing costs may lead to stronger financial positions and perhaps more distributable income!
How a sub-2 % SORA reshapes the S-REIT landscape
Funding pressure appears to be easing.
Two bruising years of “higher-for-longer” are fading into the rear-view mirror. New and refinanced loans are already resetting lower; the relief could deepen if the Fed finally turns the key. Fingers crossed!Yield spreads look healthier again.
Ten-year SGS is hovering around 2.2 % as at 30 Jun 25, while the sector still throws out ~6 % cash yields. That ~380-bp cushion gives income investors some breathing room they lacked in early 2024.Deep-discount window seems to be narrowing.
The iEdge S-REIT Index traded below 0.80× book last October; it is now flirting with 0.88×. Bargains remain, but the easy pick-ups are fewer.Narratives may pivot back to operations.
With debt angst fading, analysts will once more obsess over rent reversions, shopper traffic and AEI execution instead of LTV covenants.
Chart Review — Rate Relief Meets Break-Out
A fresh look at the overlay of 3-month SORA Mar-25 futures (red) against the iEdge S-REIT Index (blue) shows why the sector’s mood has brightened.
SORA futures first.
The contract has slid to 98.29, implying a forward rate a shade under 1.7 % (100 – 98.29).
That drop has sliced cleanly through each red-dotted support band (≈2.7 %, 2.5 %, 2.3 %, 2.1 %), leaving funding costs at their cheapest point since the 2022 lift-off.
MAS’s own daily print seems inline with the story: on 27 June the 3-month compounded SORA sat at 2.06 %, down from peaks above 3.5 %.
Now the S-REIT price action.
The blue S-REIT curve carved a March low near 970, then punched straight through the long-time resistance zone at 995 – 1,000.
It is now camped around 1,021, eyeballing the next red-dotted ceiling near 1,030. A sustained close above that level may reinstate the pre-hiking up-trend channel that broke years ago.
Why the pairing matters?
It is because a cheaper forward funding and a decisive index break-out together tend to widen dividend-yield spreads and restore investors’ appetite for the sector. History says the combination may bring mid-single-digit 12-month total returns, provided macro data don’t spring an inflation surprise.
Kopi Takeaway
When the cost of money heads south while SREIT cash payouts stay north of 5 %, managers can refinance on friendlier terms and unitholders keep pocketing fat coupons. That backdrop could support further price gains, especially if:
The iEdge S-REIT Index holds above 1,000 and, ideally, breaks 1,030; and
SORA futures remain below the support turned resistance band of around 2%.
If both boxes tick, short-term momentum for the sector may strengthen. Fail either test and the rally likely pauses for breath.
Who may do well
Heartland malls next to MRT stations (FCT, CICT). Daily-needs shoppers keep showing up, so rent checks stay steady even if the economy wobbles.
Logistics warehouses with “inflation clauses.” Many of these leases say, in plain English, “rent goes up whenever the official cost-of-living index (CPI) goes up,” so income keeps pace with rising prices.
Special-use buildings like hospitals and data-centres. Tenants sign long, sticky leases and can’t easily move, so they absorb modest rent bumps without fuss.
Who still needs watching
Hotel REITs: Last year’s Taylor-Swift tourism surge set a high bar; now “RevPAR” (industry shorthand for revenue per available room) is growing much more slowly, making year-on-year comparisons tougher.
Western office REITs: Many U.S. and European towers still have too many empty desks. Even if borrowing costs fall, lower rates alone won’t fill the space—what they really need is fresh tenants.
Dividends-for-Kopi Portfolio Spotlight – J69U
Frasers Centrepoint Trust – J69U
The half-year distribution hit my account back in May, about S$738 or over 300 cups of Kopi!
Key takeaways from FCT’s 1H FY25 numbers:
Revenue S$184.4 m, NPI S$133.7 m — both up ~7 % YoY.
DPU 6.054 cents, inching higher despite a marginally larger unit base.
Gearing 38 %; about 76 % of debt is fixed or hedged at an all-in 3.9 %.
Management guidance flags positive rental reversion in the high single digits and 99.5 % committed occupancy.
Pipeline: Hougang Mall’s makeover (target 7 % ROI, completes Q3-26) and the full take-up of Northpoint City South Wing should nudge DPU along without jumbo rights issues.
FCT isn’t shooting for the moon but a >5 % forward yield backed by heartland foot traffic and a gentle DPU growth path still buys plenty of kopi while letting me sleep. Historically, betting against daily-needs spending in the HDB suburbs hasn’t worked well.
Final Thoughts
SORA under 2 % doesn’t fix every SREIT problem, yet it does remove one of the heaviest brick from the sector’s backpack. From the market chatters, the S-REIT outlook 2025 seems to have improved versus months ago.
My Kopi Stats (as of 30 Jun 2025):
Invested: S$28,080.00
Current Value: S$29,640.00
Unrealized Gain: S$1,560.00 (+5.56%)
Dividends Collected: S$2,473.84 (8.81% yield on cost)
Total ROI: S$4,033.84 (+14.37%)
Frasers Centrepoint Trust remains a steady cup in my kopi portfolio filling the pot year after year. You can see my entire portfolio here.
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