It will help but only a little.... you can do the math, CLW has...

It will help but only a little.... you can do the math, CLW has over 2.1 Bil in debt, so for every 1% increase in rate, interest payment will go up by $ 21 mil....

their total property income per year is around $200 mil, 50% is linked to CPI, so to offset the 1% increase in rate, they will need the CPI to run at 20%, which is impossible...

the good news is, 70% of their debt are hedged until a few years later and we are more likely near the end of the rate rising cycle than the beginning, so hopefully, by the time all their hedges expire, rate will start to come down.

We are at a very interesting times, which could present a lot of risk and enormous opportunities in the REIT space, this inflation is not caused by low interest rate and simply by increasing the rate will not cure the inflation problem, the core of this inflation is down to supply and demand... we have government policies allowing for people to come in, lack of government planning for houses etc which is causing the current problems... simply by increasing the interest rate will not cure the problem but will make a lot of middle/lower income people suffer and potentially life threatening damages..... as long as there are demand in the economy, businesses and landlords can pass on the costs to their tenants/customers.... RBA really needs to sit down with the government and work out a solution and not simply increasing the rate...

Phillip Lowe has said times and times again he will do anything to combat inflation but with the amount of media/political backlash, I very much doubt he will increase the rate like what he said he would...every 0.25% increase he makes from now on, he will need to think hard and harder.... I will be very surprised to see another 3-4 rate rises... I think 1 or 2 will be most likely.....

Lucky for CLW as I said, we still have a low cost of debt due to our hedged position, various sources of funding, including bond market and oversea/local banks.... our tenants are able to absorb all the increases as compared to other less quality REITs.... out of all the reits currently listed, I still prefer CLW