Singapore’s Real Estate Investment Trusts (SREITs) are gearing up for a mixed set of results in the upcoming reporting season, as they navigate the effects of fluctuating interest rates and global tariff hikes, according to CGS International report.
The sector has seen a 3% rally since 23 June 2025, driven by expectations of potential cuts in the Federal Reserve’s interest rates in the second half of the year.
The anticipated results for SREITs are varied, with some trusts like CapitaLand Ascendas REIT (CLAR) and Keppel DC REIT (KDCREIT) expected to report year-on-year growth in distribution per unit (DPU) due to positive rental reversions and lower funding costs. However, others may face challenges from reduced capital top-ups and increased asset vacancies.
The sector’s overall DPU is projected to remain relatively flat year-on-year, although there is optimism that declining interest rates could lead to reduced average debt costs, potentially boosting DPU growth. “We anticipate SREITs to enjoy stable and high portfolio occupancy,” the report noted, highlighting the benefits of moderated positive rental reversions and interest cost savings.
Despite these positives, some SREITs may experience lower DPU due to factors such as frictional vacancies and high funding costs. The report also suggests that hospitality REITs might face challenges due to a weaker first quarter, despite improved international visitor arrivals in April and May 2025.
The sector remains optimistic, maintaining an “Overweight” rating on SREITs, with top picks including KDCREIT and CLAR. These trusts are favoured for their strong operating metrics and diversified portfolios, which are expected to support growth and value creation opportunities. As the reporting season unfolds, investors will be closely monitoring updated guidance on debt costs and the impact of tariff hikes on industrial spaces.
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