Why did REIT prices drop this week? 6.3% dividend yield for Ascendas REIT, CICT a great buy? (as a Singapore Investor)


For those of you following REITs.

You may have noticed the big drop in REIT prices this week.

For example, here’s Ascendas REIT with a big weekly plunge from 2.70 to 2.48.

That’s an 8% drop, just this week alone. 

At this price, Ascendas REIT is back to the lows hit in late 2022, and close to the March 2020 lows.

6.3% dividend yield at this price.

Here’s Keppel DC REIT.

The REIT started the week above $2.00, and closed at $1.72.

That’s a massive 14% drop in one week, on very high volume as well.

At this price it is close to 2022 lows, and even below March 2020 lows.

Here’s CICT, dropping to its lowest levels since 2020 COVID.

At this price, it pays a 6.2% dividend yield:

Now the exact impact varies from REIT to REIT, but by and large most REITs had a very terrible week.

Blue Chip REITs have been quite hard hit this week?

In fact if you look at the price performance carefully, it seems that it was the bigger, blue chip REITs that got hit particularly hard this week.

You know, the big boys from CapitaLand, Mapletree etc.

Whereas comparatively the smaller cap REITs (despite having a brutal year) have been faring much better this week.

Why was this the case?

This article was written exclusively for Patreons. I am releasing it as it may help you think through the events that are currently playing out, and how it may affect you.

If you find content like this helpful, do consider signing up as a Patreon for more exclusive content like this. You will also receive full access to my personal Stock / REIT watchlist, and personal portfolio.

Is this because of higher long term interest rates?

I suppose the conventional answer is – higher long term interest rates.

You can see how the US 10 Year yield has screamed higher the past few months, going from 3.45% in June 2023 to 4.95% today.

That’s a 1.5% move in the most important interest rate in the world, in the span of 4 months.

Surely the markets had to react at some point?

But… why this week?

But that said, the US 10 year interest rates have been soaring for a few months now.

As have SG 10 year interest rates.

Why did S-REITs only get hit so badly this week?

Now I can’t verify this for certain (if anyone has knowledge on this please leave a comment below).

But my guess, is for some reason – the big boys (institutional players) have started to sell S-REIT positions this week.

Whether it is because of:

  • Middle East instability (with increasing possibility of escalation after the events this week)
  • Fed talk about interest rates staying higher for longer
  • Automated index rebalancing
  • Active risk management

Is not so clear.

But it does seem that institutional players have been sellers of REITs this week.

And that is why the traditionally stable blue chip REITs have been so hard hit this week.

Whereas some of the smaller cap REITs have been relatively spared.

But like I said – I don’t have hard evidence of this, so anyone who has information feel free to leave a comment below.

Are REITs cheap on a fundamental basis here?

Let’s run some back of the napkin numbers.

The 20 year average yield of Ascendas REIT is about 6%.

Whereas the 20 year average 10 year SGS yield is about 2.35%.

That’s a 20 year yield spread of about 3.65%.

But c’mon – let’s be generous and round that down to 3.5%.

What is a “fair value” for Ascendas REIT

Now the 10 year SGS yield today sits at 3.4%.

Given all the talk about higher for longer, an inflationary decade, 1 hot war in Europe and a good chance of another one in the Middle East.

What’s a fair 10 year SGS yield this decade?

Let’s assume 3.0%.

Add on a 3.5% yield spread, and this indicates fair value for Ascendas REIT is about 6.5% yield.

Ascendas REIT today trades at 6.3% yield.

But don’t forget if interest rates stay high you’re probably going to see negative DPU growth of about 3-5%.

That means Ascendas REIT today is about low 6% yield, vs “fair value” of 6.5%.

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What does this all mean?

I suppose the point here.

Is that if you assume interest rates are going to stay high this decade.

Then it’s hard to say that REITs are a screaming buy here even after the big sell-off.

At best they are in “fair value” range.

So FH… are you buying REITs?

That said, investing is somewhat path dependent.

While I agree interest rates will stay high this decade, I have my doubts about the next 12 – 24 months.

The Feds have pretty much made clear that they are done with hiking for this cycle.

Market only prices in a ~30% chance of another hike at this point, and Fed comments this week support the fact that they are done hiking for this cycle.

And what follows a hiking cycle – is almost always rate cuts.

The only question is how long.

Let’s say you buy CICT at 6.2% yield.

Let’s say you’re absolutely wrong, and interest rates stay high for the next year or two.

CICT drops to 1.5, which is the absolute COVID bottom.

That’s a 12% capital loss, which after 2 years of dividend you’re probably flat.

Now let’s say you’re right, and what follows is interest rate cuts.

If CICT goes back to conservatively $2.00.

That’s a 17% upside, coupled with 2 years of 6% dividend.

About 29% return.

Is the risk-reward for REITs attractive?

Just to be absolutely clear – I am not saying the numbers above are cast in stone.

If things go wrong, obviously CICT can go below $1.5.

But I hope you get my point from the discussion above.

It’s that base case – you stand to make more here if you are right, then what you lose if you are wrong.

It’s a heads you win, tails you lose less than what you would have won (had you won) scenario.

And if you just simplistically assume a 50-50 odds of win-loss, that’s actually quite a favourable trade provided you size it well.

You can tilt the odds further in your favour with bottom up REIT picking

Now personally I don’t see this as 50-50 odds.

I see one scenario as more likely than the other.

But in any case, I think you can tilt the odds further in your favour by good REIT picking.

If you pick the right REITs with:

  1. High quality real estate (ideally heavy Singapore focus, with property in great locations that cannot be easily replaced)
  2. Strong balance sheet
  3. Stable sponsor

You’re looking at easily 7%+ yields.

That’s 7% yield you’re getting paid to wait, until the interest rate climate turns.

So personally – I like REITs where we are.

I don’t think REITs are a sure win investment of course.

At this point in the cycle, it’s still unclear where the cycle bottom is, and if interest rate stay high you could see more pain.

So you don’t want to use leverage, and you want to position size well, and average in carefully (you still want to maintain healthy cash allocation because of macro uncertainty).

But if you do, I think the risk-reward looks interesting here, with a 2 – 3 year horizon.

In any case, I will be updating the REIT watchlist for Patreons this weekend, on the REITs I am keen to pick up (and approximate target pricing).

With the recent sell-off this week some of the big blue-chip REITs are starting to look interesting as well, so I will be updating the analysis for those on Patreon.

What alternatives are there to lock in high interest rates?

Now let’s say you don’t want REITs.

Let’s say you have a decent risk appetite, and you want plays that offer more risk-reward if interest rates were to turn?

Broadly, these are the options:


Risk Level


REITs (CICT or Ascendas REIT)

Low – Medium


US 2 year T-Bills

No risk if held to maturity (but USD FX risk)


US 10 year Treasuries

No risk if held to maturity (but USD FX risk)

Potential for capital loss if sold before maturity

4.93% (subject to withholding tax)

Tech Stocks

Low – High (depending on the stock)

No yield, capital gains play

 I’ve been getting quite a few question on this, so let me talk about each briefly (we already discussed REITs above).

US Treasuries

I wrote a piece on US Treasuries for Patreons this week.

Do note that US Treasuries are subject to withholding tax (for Singapore investors).

This means that juicy 5% yield is cut down to 3.5% after withholding tax.

Not only that but there is FX risk – if there is a big USD depreciation against the USD.

I would say if you want to enjoy the 5% yield on USD, you can either just place it in a fixed deposit with a bank (for eg. DBS pays 5% on USD Fixed Deposit), or just park it in Interactive Brokers where they pay 4.83% rates.

You only use US Treasuries (as a Singapore investor) if you want to make a bet on where interest rates are headed.

In which case the long duration Treasuries (for eg. 10 or 20 years) are great because they offer a lot of convexity.

To illustrate – a 1.5% rise in interest rates from here would result in 11.6% capital loss, whereas a 1.5% drop in interest rates would result in a 26% capital gain.

You will make more than you lose here – and is the next 1.5% move in interest rates going to be up or down?

But this long duration nature also means capital loss if you’re wrong, and don’t forget about the opportunity cost of the capital.

Which means a better way to play this may be via long dated call options.

But here we’re going into the more sophisticated macro plays, which I don’t want to discuss too much here.

You can check out the Patreon content if you are keen, where I discuss this in further detail.

Long story short – Treasuries work, but whether you go with long or short duration treasuries, whether you buy in cash or via futures or call options, those complexities will come into play which makes this a more sophisticated trade. 

Tech Stocks

The final one is of course tech stocks.

The thinking here is simple.

You buy your favourite high growth tech stock.

If interest rates are going down, you may see a lot of upside from:

  1. Declining interest rates
  2. Improving stock earnings

The downside with tech stocks, is that there is no dividend yield.

In a climate where USD cash is paying 5%, and SGD Cash pays close to 4% risk free, and blue chip REITs pay 6% yield – that opportunity cost is very real.

But I don’t deny that if the macro turns, tech stocks could see the highest upside if you pick well.

In any case, I will be updating the Stock / REIT watchlist for Patreons this weekend, on the Stocks / REITs I am keen to pick up (and approximate target pricing).

With the recent sell-off this week some of the big blue-chip REITs are starting to look interesting as well, so I will be updating the analysis for those on Patreon.


This article was written exclusively for Patreons. I am releasing it as it may help you think through the events that are currently playing out, and how it may affect you.

If you find content like this helpful, do consider signing up as a Patreon for more exclusive content like this. You will also receive full access to my personal Stock / REIT watchlist, and personal portfolio.


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  1. This is good analysis, FH! Thanks for the work!

    Personally I don’t think anyone needs to bottom fish for non blue chip Reits here. Just stick with the strong sponsors, and they are unlikely to go bust.

    I sold all my weird (non brand name) Reits eons ago, when this cycle started. They always have the highest beta. We are finally seeing the strong Reits cracking, and stuff looking the start of oversold.

    That said, cheap can get cheaper! ????

    Mrs Pennies

    • Indeed – most of the small high beta REITs have been absolutely clobbered. If (when) this interest rate cycle turns, there could be some amazing pickups there.

      That said I agree on the difficulty of trying to bottom fish. The safer play is to wait for the Feds to start cutting before buying, but for investors with holding power and who use cash and size well, I think current prices are attractive enough to start looking at individual names.

    • Likewise for other US treasuries, IBKR indeed keep a 30% WHT but WILL refund it within the first 6 weeks of the following year as treasuries are tax exempt. Slightly annoying but the current 5.4% are real.

      • Interesting – I actually didn’t know the WHT was automatically refunded.

        If so the 20Y Treasuries are an interesting buy for investors comfortable with the FX exposure. It’s 5% yield, and if (when) interest rates go down it is very decent capital gains.

        • Another option is to just buy a 20+yr US Treasury ETF (e.g. to avoid any WHT/refund hassle, there’s DTLA = Ireland-domiciled accumulating equivalent of the well-known US-domiciled TLT).

          @Florian: how do you buy US treasuries via IBKR, are those actual specific bonds and is this easy & cost-efficient?

          • Search for “Bond Scanner” in IBKR, then treasuries. Yes, actual bonds. I’m currently rolling over T-Bills expiring in 2-3 months and hold them until maturity.

            $5 flat for amounts under $250k

            Moving over to 30-year bonds is a play I’m considering for 2024.

  2. Hey FH, great article as usual.

    Was wondering what’s your view on Daiwa House Logistics Trust now? Given that the yen has depreciated significantly, I’m thinking that Daiwa could act as a proxy bet on lowered US interest rates / BOJ hiking rates in the future, leading to an appreciation in JPY-SGD and earnings increase.

    ~100% occupancy, 100% fixed rate loans, a healthy 35.7% gearing and a ICR of 11.7 times. The metrics look quite good, but seems like the market is heavily discounting the FX risk by giving it a current div yield of ~10%. Would love to hear your thoughts on this!

    • Was thinking of the same too. As long as the underlying rental holds steady, it could be a pretty good play for the reasons you mentioned.

      The risks to me are (1) higher rates in Japan will hit Japan real estate prices, (2) very small REIT, and sponsor doesn’t have a long track record in Singapore – remains to be seen how they will manage the REIT through this crisis, and potential acquisitions.

      Question then is whether this is priced in.

      For what it’s worth, I havent bought a position. Still feels too early in the cycle, for small cap plays like that. Let’s see though, might change my mind any time.


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