Economic Context - The US Federal Reserve lowered interest rates by 0.25 percentage points, establishing a new target range of 4% to 4.25% [1] - The Fed is anticipated to continue lowering rates through the end of 2025, indicating a shift in the global interest rate cycle [1] Frasers Logistics & Commercial Trust (FLCT) - FLCT's distribution per unit (DPU) fell by 13.8% year on year to S$0.03 in the first half of fiscal year ending 30 September 2025 due to high borrowing costs [3] - Lower interest rates are expected to reduce FLCT's financing expenses and stabilize its DPU [3] - FLCT's gearing ratio was 36.8% as of 30 June 2025, well below the regulatory threshold of 50%, providing room for future acquisitions [4] - The trust's logistical and industrial assets have a weighted average lease expiration (WALE) of 4.6 years and a 96.7% occupancy rate [4] - FLCT's portfolio occupancy rate decreased by 1.4 percentage points quarter-on-quarter to 92.5%, but is expected to improve following the divestment of underperforming assets [5] Mapletree Pan Asia Commercial Trust (MPACT) - MPACT, formed through the merger of Mapletree Commercial Trust and Mapletree North Asia Commercial Trust, has a diversified asset base across multiple countries [6] - MPACT's DPU fell by 3.8% year on year to $0.0201 in the first quarter of fiscal year 2025/2026 due to negative rental reversions in its overseas portfolios [7] - The trust has a manageable gearing ratio of 37.9% as of 30 June 2025, which helps mitigate financing cost sensitivity [7] - MPACT achieved an overall portfolio rental reversion of 1.4%, with VivoCity in Singapore showing a 14.7% uplift [7][8] - However, overseas markets faced challenges, with rental reversions declining by 19.4% in China and 7.9% in Hong Kong [8] City Developments Limited (CDL) - CDL is one of Singapore's largest property developers, with a diversified portfolio across residential, commercial, and hotel sectors [9] - Lower interest rates are expected to enhance mortgage affordability and boost property demand, benefiting CDL's hotel segment amid a global travel recovery [9] - CDL's revenue for the first half of 2025 increased by 8% year on year to $1.68 billion, driven by strong property development performance [10] - The company reported a 10% year-on-year decline in profit before tax to S$139.9 million due to net foreign exchange losses and reduced divestment gains [10] - CDL maintained a strong capital position with cash reserves of S$1.8 billion and total cash and undrawn committed bank facilities of S$3.5 billion [11] - The Singapore office portfolio achieved a committed occupancy of 97%, outperforming the island-wide rate of 88.6% [11] - The retail portfolio also performed well with 97% occupancy and a 12.8% rental reversion [12] - A special interim dividend of $0.03 per share was declared for 1H2025, reflecting a commitment to shareholder returns [12] Investment Implications - Interest rate cuts are expected to provide significant benefits for Singapore REITs and property developers, particularly those with higher gearing levels [13] - Lower borrowing costs will enhance distributable income and support higher asset valuations as cap rates compress [13] - Investors are advised to focus on companies with strong occupancy rates, quality assets in prime locations, and reputable sponsors [14] - Companies that combine operational excellence with strategic leverage will be well-positioned to capitalize on declining rates [14] - Singapore blue-chips such as FLCT, MPACT, and CDL are expected to see meaningful gains from lower financing costs and stronger valuations [15]