Investors might be tempted by high-dividend stocks similarly to how a flame draws in moths.
The appeal lies in a straightforward comparison: a yield exceeding 7% appears far more attractive than those offered by blue-chip REITs, prompting the question of whether reaching for higher yields is a sound choice.
The answer, however, requires a deeper look beyond the headline yield.
While an enticing yield may indicate genuine value, it can also be a warning sign of underlying challenges.
Singapore’s small-cap REIT sector, defined by market capitalizations under S$1 billion, features several trusts with yields above 7%.
Although these may not be widely recognized names, some achieve occupancy rates over 95% and benefit from participation in ongoing structural growth trends.
Consider these three small-cap REITs for further evaluation.
Digital Core REIT (SGX: DCRU)
Digital Core REIT holds 11 freehold data centers distributed across the United States, Canada, Germany, and Japan, with assets totaling US$1.7 billion as of 31 December 2024.
Priced at US$0.50, its shares deliver a 7.3% dividend yield.
The REIT has showcased stable performance in the first nine months of 2025 (9M2025), largely fueled by an expanded portfolio.
Its gross revenue experienced an 83.9% year-on-year (YoY) increase, reaching US$132.4 million, while the net property income (NPI) was up 49.6% YoY at US$67.7 million.
Nevertheless, distributable income grew marginally by 1.9% YoY to US$35.2 million, due to the impact of elevated finance expenses linked to recent acquisitions.
This disparity between revenue growth and unitholder returns is something worth monitoring.
Portfolio occupancy remained robust at 98% for in-service properties as of 30 September 2025, consistent with the previous quarter.
The REIT benefited from strong data center market conditions, with artificial intelligence workload demands bolstering its performance.
Northern Virginia observed unprecedented vacancy rates at 0.3%, alongside wholesale pricing rising to US$225 per kilowatt monthly in 2025, up from US$210 last year.
On the acquisition front, Digital Core REIT acquired a further 20% interest in Digital Osaka 3 for approximately US$86.7 million on 26 March 2025.
Moreover, the REIT is advancing redevelopment efforts at 8217 Linton Hall in Northern Virginia.
Management has actively pursued unit buybacks, purchasing 1.8 million units year-to-date at an average price of US$0.565, resulting in a 0.1% distribution-per-unit (DPU) increase.
Currently trading at a 36% discount to net asset value, Digital Core REIT maintains a leverage ratio of 38.5%, with US$431 million in debt capacity.
United Hampshire US REIT (SGX: ODBU)
United Hampshire US REIT (UHREIT) holds a portfolio of 20 grocery-anchored and necessity-based retail properties, along with two self-storage facilities across eight states in the US, managing assets valued at US$731.7 million.
Priced at US$0.50, the REIT presents an 8.3% dividend yield.
In 3Q2025, UHREIT reported mixed financial results.
Gross revenue saw a 1.4% YoY increase to US$18.1 million, while the NPI rose 5.7% YoY to US$12.7 million.
However, for 9M2025, gross revenue fell 1.6% YoY to US$53.8 million, and NPI dropped 1.9% YoY to US$36.7 million, mainly due to the absence of rental contributions following the disposal of three properties.
Despite the revenue decline, distributable income rose significantly, up 15.5% YoY to US$7 million in 3Q2025.
This improvement was driven by reduced finance costs resulting from diminished interest rates and lower borrowings following strategic divestments.
The REIT’s DPU for 1H2025 increased 4% YoY to US$0.0209, with an annualized DPU of US$0.0418.
UHREIT maintained solid operational metrics, with committed occupancy rates of 97.2% for grocery properties and 94.9% for self-storage facilities.
In terms of portfolio management, UHREIT sold Albany-Supermarket in January 2025 for US$23.8 million, 4.2% above its purchase price, and acquired Dover Marketplace in Pennsylvania for US$16.4 million in August 2025, projected to improve DPU by 2%.
The REIT is also constructing a new 5,000 square-foot store pre-leased to Florida Blue for a decade.
Elite UK REIT (SGX: MXNU)
Elite UK REIT possesses 148 properties with a valuation of £419.7 million as of 30 September 2025, with 99.1% of rental income secured by UK government tenants.
At £0.36, the REIT offers an 8.5% dividend yield.
In the first nine months of 2025 (9M2025), Elite UK REIT achieved revenues of £28.3 million, marking a 1% YoY increase.
NPI slightly declined by 0.5% YoY to £27.4 million, as expenses incurred for asset repositioning affected performance.
Here’s what’s essential for income-seeking investors.
Despite modest revenue growth, distributable income increased by 6.2% YoY to £14.8 million, raising the DPU to £0.023, up 9.4% from £0.021 last year.
This growth stemmed from interest savings through capital management strategies and interest rate optimization, coupled with tax benefits associated with sustainability-driven capital expenditure.
Elite UK REIT reported borrowing costs at 4.8% as of 30 September 2025, with 85% of its debt secured at fixed rates.
On the acquisition front, the REIT procured three government-leased properties for £9.2 million, adding the Department for Environment, Food & Rural Affairs as a new tenant, achieving a 0.6% DPU accretion while reducing gearing by 20 basis points.
Looking beyond acquisitions, the REIT is actively pursuing several repositioning initiatives to enhance value.
Planning approval has been obtained for converting Lindsay House in Dundee into a 168-bed student accommodation, with completion anticipated by the 2027 academic year.
The project aims for a five-fold valuation increase from its current valuation of £1.5 million.
Pre-planning consultation for Cambria House in Cardiff concluded positively, targeting 348 beds within a short distance from Cardiff University.
Elite UK REIT has also lodged planning applications for Peel Park in Blackpool, securing 120 MVA power supply for a hyperscale data center development valued at £32.8 million.
Lease management emerges as a crucial priority.
Elite UK REIT aims to finalize partial Department for Work & Pensions lease extensions for 2028 maturities by 1Q2026, addressing £352.1 million of its portfolio.
This strategy seeks to diversify lease expiry profiles and extend leases ahead of their maturities, thereby maintaining income visibility while repositioning projects progress toward fruition.
Smart investors know to look beyond merely high yields.
High yields can be beneficial or illusory based on underlying drivers.
Digital Core REIT’s 7.3% yield stems partially from a 36% NAV discount, while acquisition financing slightly strains distributable income growth.
UHREIT’s 8.3% yield is enhanced by falling interest rates.
Elite UK REIT’s 8.5% yield relies on successful government lease extensions before 2028 maturities.
Commonly, all three have small-cap attributes: thinner liquidity and foreign currency exposure.
Investors willing to accept these trade-offs may find compelling prospects in high occupancy and proactive management.
Ensure the business fundamentals to maintain steady distributions.
