Privatisation on the horizon for S-Reits with low liquidity, mostly overseas assets

[SINGAPORE] The Singapore real estate investment trust, or S-Reit, market is undergoing consolidation with the possible exit of smaller Reits and listing of bigger ones, said market observers.

Those facing low liquidity and those with a majority of overseas properties are especially vulnerable to being privatised, they added.

Interest rates have stabilised, following a series of rate cuts by the US Federal Reserve late last year. The Fed has indicated that it intends to pause rate cuts for now amid increased economic uncertainty in the US and a higher inflation outlook for the year.

Observers said that higher-for-longer interest rates might make highly under-valued Reits more attractive for privatisation.

Lee Wei Hock, deputy head of assurance at EY in Singapore, said that an acquirer may privatise a Reit, strengthen it and then re-list it when market conditions become favourable.