For instance, Frasers Centrepoint Trust(FCT) distributions per unit (DPU) were flat in its 1HFY2025 results compared to a year ago. All FCT’s properties are in Singapore. Mapletree Industrial Trust(MINT) also managed to keep its DPU flat y-o-y despite having a significant portion of assets in the US.
Mapletree Pan Asia Commercial Trust (MPACT) reported a 14.8% y-o-y decline in 4QFY2025 DPU to 1.95 cents, and a 10% y-o-y decline in FY2025 DPU to 8.02 cents (FY2024 DPU: 8.91 cents). The declines were attributed to lower overseas contributions and the sale of Mapletree Anson on July 31, 2024. MPACT’s DPU would have fallen by 8.6% in constant currency terms.
Mapletree Logistics Trust’s 4QFY2025 DPU fell by 11.6% y-o-y to 1.955 cents and by 10.6% to 8.053 cents in FY2025. MLT blamed the declines on lower contribution from China, absence of revenue contribution from divested properties and currency weakness (mainly JPY, KRW, VND, CNY, and AUD) offset by foreign currency forward contracts to hedge foreign-sourced income.
“Following the announced tariffs by the second Trump administration, we have seen a clear bifurcation of (unit price) performance. Key outperformers are CapitaLand Integrated Commercial Trust(CICT) and FCT which were 6% and 9% higher respectively over the past month. Conversely, (unit price) underperformers are industrial names with higher overseas exposure such as MLT and MINT which are down 8-12% over the past month,” notes the GS report.
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Recession, stagflation, interest rates
The GS economics team has most recently forecast three consecutive 25 bps Federal Funds Rate cuts starting in July, lowering the FFR to 3.5% to 3.75%.
“Our team sees a 45% 12-month recession probability in which case the Fed would cut 200 bps in the next year,” the GS report says. This remains to be seen as many economists have forecast an even chance of tariff-induced stagflation which comprises a mix of inflation and low or no growth. Advanced economies experienced stagflation in the 1970s brought on by the oil crisis.
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Vasu Menon, managing director, investment strategy, OCBC, points out that there are several differences between current happenings on the trade war front versus what happened in 2018. In 2018, China was the main recipient of tariffs.
On April 2, Trump announced tariffs on the whole world before flip-flopping daily since then. Tariffs have been imposed on steel, aluminium, and auto imports while tariffs on semiconductors, pharmaceuticals, copper, and lumber have yet to be announced.
“It remains to be seen if he will follow through with this threat,” Menon says. In addition, Trump could eventually impose more tariffs on China after the 90 days pause; who knows? “This may play on investors’ minds given Trump’s penchant for surprising markets. This seems unlikely, but it can’t be totally ruled out,” Menon observes.
The Trump on-off-on-off tariffs are still hefty. “They can have a significant impact on the US economy and inflation if he follows through with it after the 90-day pause ends on July 8. It also remains unclear if Trump’s 10% universal tariffs and his trade policy flip-flops, which have created a great deal of economic uncertainty -undermining confidence in US assets, including the greenback and US Treasuries - will hurt the US economy and corporate sector in the coming months,” Menon says.
Where does this leave the S-REITs?
Since factoring in a possible second-order tariff impact from weaker economic growth, GS expects “incremental macro shifts to drive the reversal of recent diverging performance.” For instance, the SGD could appreciate against most regional currencies, GS says. The SGD has already strengthened against the USD, and unlike regional currencies, the SGD, coupled with the CHF are the ultimate safe havens.
“We incorporate FX movements in our earnings changes and downgrade MINT from “buy” to “neutral” given the greater impact from USD movement,” GS says. The North American portfolio accounts for 45.6% of MINT’s AUM as at March 31.
Separately, GS has “buys” on Keppel DC REIT, MLT and CapitaLand Ascendas REIT, and a sell on Keppel REIT.
