In a time when high interest rates are impacting balance sheets of real-estate investment trusts (REITs) globally, two Singapore-listed companies have taken contrasting actions that have positively impacted their units.
Positive Performance Amidst Uncertainty
Prime US REIT saw a remarkable 27% increase midday Thursday, setting a new record for one-day percentage gain. On the other hand, ARA U.S. Hospitality Trust experienced its most significant advance since December, with a 7.4% rise.
Prime US REIT recently announced that it will distribute 0.25 U.S. cents in cash and provide one bonus unit for every 10 held. Meanwhile, ARA U.S. Hospitality Trust disclosed before the market opened that it had raised its 2023 distribution by 12% to 3.430 U.S. cents.
Challenges in the Market
The challenging environment of rising interest rates has been impacting REITs, particularly those with exposure to the U.S. and European markets.
Just last week, Keppel Pacific Oak US REIT revealed it would suspend payouts from the second half of 2023 until the second half of 2025 due to increased leverage amidst a difficult U.S. office market.
Similarly, Manulife US REIT also stated it would halt distributions to unitholders until the end of 2025 as part of its efforts to reduce debt and meet capital-expenditure requirements.
It's evident that in the face of financial strain caused by external factors, strategic decisions play a crucial role in maintaining stability and investor confidence within the real-estate market.
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