rising interest impact to the dividends

$Mapletree Ind Tr (ME8U.SG)$ Management announced that every 0.25 percentage point increase in interest rates may result in an approximate S$0.0001 decline in DPU per quarter.

MLT’s trailing 12-month (TTM) DPU ended 30 September 2022 amounted to a total of S$0.08969. 

The 2.25% increase in interest rates (i.e. 0.75% x 3) thus far has resulted in DPU declining by S$0.0001, representing a 4% drop for the REIT’s TTM DPU.

While the impact of higher interest rates cannot be avoided, a strong balance sheet helps to provide some buffer against their effects. 

Dividend-seeking investors should stick with REITs that have prudent capital management as such REITs are more likely to continue meeting their debt obligations.

For instance, 82% of MLT’s borrowings were based on fixed interest rates as of the recent quarter, slightly higher than 80% in the previous quarter.