A Singapore logistics REIT refinances its debt at a higher rate
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The prompt
Quaystone Logistics REIT (fictional, listed in Singapore) earns net operating income (NOI) of SGD 200 million a year. It has SGD 1,500 million of debt at 3 percent, and management and trust costs of SGD 15 million a year. The debt must be refinanced at 5.5 percent, and buyers now value warehouses at a 5.5 percent cap rate instead of 5 percent. What happens to funds from operations (FFO), which funds the payout, and to debt as a share of portfolio value, which Singapore caps at 50 percent?
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