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Rising inflation ‘valid concern’ for S-REITs, with some mitigating factors: OCBC

Chloe Lim
Chloe Lim3/3/2022 03:58 PM GMT+08  • 6 min read
Rising inflation ‘valid concern’ for S-REITs, with some mitigating factors: OCBC
Higher inflationary pressures to be a concern on the impact of margins on the Singapore REITs (S-REITs) sector: OCBC
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The team at OCBC Investment Research (OIR) says it foresees higher inflationary pressures to be a concern on the impact of margins on the Singapore REITs (S-REITs) sector.

Amid the inflationary pressures, interest rates are poised to increase further as central banks are likely to raise their benchmark rates in 2022, notes the team.

“Although this could result in higher borrowing costs ahead, we believe the S-REITs under our coverage have continued to be prudent on their capital management. The average gearing ratio stood at 37.4%, as at Dec 31, while 74.4% of their borrowings are fixed or hedged, which would mitigate the expected increase in borrowing costs ahead,” writes the team in their March 1 report.

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