The first quarter of 2024 (till Mar 27) saw the FTSE EPRA Nareit Global Reits Index decline 0.6 per cent in total return. The iEdge S-Reit Index recorded greater total return declines of 7.3 per cent across the same period.
The weak performances were mainly due to the persistent inflation reports and resulted in the FED holding their decision to delay cutting interest rates when they began talking about it at the beginning of the year 2024.
With a higher interest rate, it affects REITs
- in higher financial costs which may lead to lower distributions
- valuation of property assets owned by REITs may decline
- investors may sell REITs and buy other assets with more attractive yields and lesser volatility