Finally The Light At The End Of The Tunnel For REITs Has Arrived

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This is going to be a short post, to join in the crowd to talk about the performance of REITs lately.

Finally, the long awaited rate cut by the FED has materialized.  The anticipation began since December 2023, and we have been waiting for a whole 10 months before it finally happens.  On 18th September 2024, the FED has finally confirmed the cut of 0.50%.  This is probably not the one and only rate cut that is going to happen, so what remains uncertain moving forward is the frequency of rate cuts in the rest of this year and in 2025.  That will depend on the health and strength of the US economy moving forward.  Nearer to home, we have seen how this anticipation has been great for Singapore listed REITs.  Since the speech by Jerome Powell on 10th July 2024, REITs have staged a small rebound and I have written a post discussing whether the rally has legs.  Indeed, as of 19th September 2024, based on Lion-Phillips S-REIT ETF, REITs have rallied by about 10% while the CSOP iEdge S-REIT Leaders Index ETF has rosed by about 13%. 

As with the indexes, my REITs' portfolio also benefited from this rally, up about 12% during the same period.  This undoubtedly also helped to propel my overall portfolio to an all time high value of approximately SGD 617K (which has exceeded my goal for 2024!), with the share price of banks remaining at elevated levels, and prices of REITs recovering to 52-week highs as well.  However, I remain cautiously optimistic, because I have no idea how the pace and magnitude for interest rate cuts will turn out exactly moving forward.  Logically speaking, I think in the past couple of weeks, there has been too much of 'fear-of-missing-out' (FOMO) sentiments among the REITs investors, and the spectacular run-up in share prices of most REITs may mean that their share prices had risen way too fast too much. 

With that, there may be a possibility of price retraction soon (but when exactly that will happen is anyone's guess, or I may be totally wrong and the retracement may not happen at all).  However, I am not too concern with that because regardless of the price, I have no intention to sell most of my REITs holdings (with the exception of one REIT, but I will make the decision after this REIT release its latest results in the coming quarter to evaluate if it is still worth holding).  My long term goal remains in place, which is to continue to accumulate shares, reinvest dividends, and slowly grow my dividend income.  I believe my goals remain on track, and I should be able to receive a total annual dividend income of SGD 26K by the end of 2024, and hopefully my portfolio value can maintain above SGD 600K, or more optimistically, propel further to reach a new target of SGD 625K!  Barista FIRE, here I come...!

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