It is a common assumption that when the broader market reaches new highs, all stocks must follow suit.
However, this is not necessarily true.
Investing at market peaks can be likened to waiting in the longest line for the most popular drink, while overlooking established, dependable vendors nearby offering the same quality for a significantly lower price.
Even as the Straits Times Index achieves new record levels, several small-cap REITs on the SGX continue to trade substantially below their net asset value.
This presents income investors with a key question: is the market's skepticism justified, or are these REITs reliably generating value while being priced at a discount?
Here are three small-cap REITs where the price-to-book ratio indicates one narrative, but the dividend history may suggest a different, more positive story.
United Hampshire US REIT
Trading at US$0.51, United Hampshire US REIT has a price-to-book ratio of just 0.7 and provides a trailing distribution yield of 8.6%.
Its financial performance, however, indicates building momentum rather than a decline.
For the 2025 fiscal year, the distribution per unit increased by 8.1% year-on-year to US$0.0439, representing a third consecutive period of growth.
Distributable income rose 5.7% to US$26.9 million, despite a 1.7% dip in both gross revenue and net property income—a decrease attributed to property divestments rather than operational underperformance.
Operationally, its grocery-anchored portfolio demonstrates strong resilience with a high committed occupancy rate of 97.7% and a long weighted average lease expiry of 7.7 years.
Tenant loyalty is evident in a 90% retention rate.
The manager has effectively demonstrated that strategic asset sales can enhance returns, with recent acquisitions of Dover Marketplace and Wallingford Fair Shopping Center each contributing a 2.0% boost to distributions.
With a manageable aggregate leverage of 38.6% and no debt requiring refinancing before February 2028, the REIT offers a stable outlook for income-focused investors.
This appears to be a clear instance of a robust business that the market has undervalued, despite its consistent record of increasing unitholder distributions.
Sasseur REIT
Priced at S$0.66, Sasseur REIT trades at 0.82 times its book value and offers a distribution yield of 9.3%, the highest among the three REITs discussed.
The REIT's four outlet malls in Chongqing, Kunming, and Hefei reported stable performance for FY2025.
EMA rental income, which constitutes both gross revenue and net property income under its management model, increased 2.7% year-on-year to RMB 682.3 million.
DPU saw a slight increase of 0.9% to S$0.06138, while distributable income grew 2.8% to S$85.7 million.
The malls' operational strength is notable, with occupancy nearing full capacity at 98.8%.
A key attraction for income investors is the balance sheet.
With a gearing ratio of just 25.1%, Sasseur carries one of the lowest debt burdens among Singapore REITs, providing substantial financial flexibility with S$867.2 million in debt headroom for future expansion.
Management has been proactive in reducing costs by converting loans to Renminbi, successfully lowering the debt cost from 5.3% to 4.4%.
The associated risk is currency exposure. When converted to Singapore dollars, EMA rental income actually decreased by 0.2% year-on-year due to a weaker RMB—a factor investors should monitor.
Digital Core REIT
Trading at US$0.52, Digital Core REIT is discounted the most deeply, with a P/B ratio of 0.63 and a distribution yield of 6.9%.
This pure-play data centre REIT, backed by Digital Realty Trust, reported impressive headline growth for FY2025.
Gross revenue jumped 72.2% year-on-year to US$176.2 million, while net property income increased 43.5% to US$88.7 million.
Nevertheless, a puzzle remains for investors.
Despite this robust top-line expansion, the DPU remained unchanged at US$0.0360 compared to the previous year.
For income seekers, this discrepancy signals that while the business is growing rapidly, the increased cash flow has not yet translated into higher distributions.
What DCR offers is a significant growth trajectory.
Leasing activity was strong, with US$26 million in annualised rent signed at a positive cash rental reversion of 31%.
The REIT also secured a major 10-year lease at its Linton Hall facility in Northern Virginia at a 35% premium to the previous rent, extending the portfolio's weighted average lease expiry from 4.6 to 5.5 years.
With a conservative leverage ratio of 37.1% and ample capacity for debt-funded acquisitions, this REIT is building substantial operational capacity, even if dividend growth is currently paused.
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