IR can be a tough role when your sector, or whole asset class, is out of favor. I’ve spent the last week exploring the situation for Singapore real estate investment trusts (S-Reits), where valuations have been hammered by climbing interest rates over recent years.
The S-Reit market has grown over the last two decades and now counts more than 40 companies, with most holding assets beyond Singapore. Investors have access to US shopping malls, European logistics hubs, Australian hotels and much more.
The development of the market, with more overseas assets and increasingly diversified portfolios, makes it harder for investors to get their heads around the investment opportunity. IR teams must therefore step in and fill the information gap.
One company I spoke to talked about the challenge of getting the concept of spacious US strip malls across to Singapore investors, who are used to the city’s towering, air-conditioned enclosures.
But when central banks are in tightening mode, Reits fall out of favor more generally. Between July 2021 and October 2023, the iEdge S-REIT Index fell more than 30 percent.
While the market recovered somewhat at the end of last year, industry players are still waiting for investor interest to come back in force to S-Reits. They hope the Fed pivot to lower interest rates – whenever that comes – will change the mood.
Expectations for interest rate cuts have slipped back in recent weeks, though. On Monday, Raphael Bostic, president of the Atlanta Fed, told CNN that he didn’t expect the first US rate cut until the summer. This week’s hot US inflation print, coming in slightly above forecasts, added to the sense that policy will remain tight in the immediate future.
The temptation, during times of low interest, is to pull back on engagement. During conversations over the last year, some IR teams have reported struggles to get management buy-in for IR activities and resources. Some leaders feel it’s wasted effort when most investors don’t want to hear your story.
But companies shouldn’t wait for a pivot in investor focus. Many S-Reits, by contrast, have spent the last two years deepening disclosures, experimenting with new communication channels, maintaining existing relationships and seeking out new ones.
They recognize that, in a crowded market, hiding during the tough times puts you at a distinct disadvantage. When conditions change, it’s the companies that are well understood and front of investors’ minds that will reap the benefits.
