Diversified S-REITs’ operating performance remain resilient amid market uncertainties
Diversified real estate investment trusts (REITs) hold a mixture of assets across multiple sub-sectors such as industrial, retail, office, and hospitality, offering investors the prospect of portfolio stability and flexibility.
The larger diversified S-REITs in the Singapore market include $Straits Times Index(STI.SI)$ counters such as $CapLand IntCom T(C38U.SI)$ (CICT), $Mapletree PanAsia Com Tr(N2IU.SI)$ (MPACT), $Frasers L&C Tr(BUOU.SI)$ (FLCT), as well as $Suntec Reit(T82U.SI)$ , which is currently on the STI Reserve list.
Recent business updates from the larger diversified S-REITs for the first quarter ended March highlight their resilient performance with most showing growth in revenue and net property income (NPI), driven by robust operating performance from existing properties and new acquisitions.
1. $Suntec Reit(T82U.SI)$
Suntec REIT's gross revenue for 1Q 2025 increased 3.4% on year to S$113.5 million, due to stronger operating performance across all properties, while JV Income also grew. It reported a higher distribution per unit (DPU) of S$0.01563 for the first quarter, up 3.4% year-on-year (y-o-y).
2. $CapLand IntCom T(C38U.SI)$
Meanwhile, CICT's gross revenue for 1Q 2025 was S$395.3 million, up 1.1% y-o-y on a like-for-like basis, while net property income (NPI) was similarly up 1.4% over the same period.
3. $Frasers L&C Tr(BUOU.SI)$
FLCT's revenue for 1H FY25 was S$232.3 million, up 7.5% on year, while adjusted NPI rose 1.6% to S$161.3 million over the same period. The growth was mainly due to full contributions from completed and acquired properties.
In terms of operating performance, the larger diversified S-REITs have also demonstrated resilience.
CICT reported strong rent reversion momentum in the first quarter of 2025 for its retail portfolio of 10.4%. It expects rent reversion to remain positive although at a more moderate pace in the next few quarters. Its office portfolio also saw positive rental reversion of 5.4%. Overall portfolio occupancy was stable, at 96.4% as of end March, ranging between 98.8% for its retail assets, and 94.7% for office assets.
MPACT’s manager also noted that its Singapore properties continued to cushion against overseas headwinds, with higher revenue and NPI from Singapore assets on a comparable basis in the latest FY24/25 ended March. It also reported positive rental reversion from the local properties during the year, ranging from 2.2% at Mapletree Business City to 16.8% at VivoCity.
Similarly, Suntec REIT and OUE Reit also achieved positive rent reversion from their respective Singapore Office and Retail portfolios.
Occupancy rates across their portfolios also remained stable. Suntec REIT reported its Singapore Office portfolio had 98.7% committed occupancy, slightly lower than 99.4% a year ago, while its Singapore Retail assets improved from 95.8% to 98.2% over the same period.
OUE REIT’s office committed occupancy improved 1.7 percentage points quarter-on-quarter to 96.3% as of end-March, while committed occupancy at Mandarin Gallery climbed to 99.5%.
These diversified REITs have also been reporting improvements in terms of capital management.
Suntec REIT completed S$730 million refinancing due in 2025 and 2026, which would result in interest savings of approximately S$1.8 million per annum and noted that it has pared down debt with proceeds from divestment of strata office units.
Meanwhile, CICT’s average cost of debt as of end-March was 3.4% down 0.2 percentage points from December.
Elsewhere, $OUEREIT(TS0U.SI)$ also noted its proactive capital management in 2024 has significantly reduced the weighted average cost of debt to 4.2% per annum as of end March, down from 4.7% as of December.
While trade tensions and geopolitical uncertainties present headwinds, the REIT managers note that their portfolios are well-positioned to steer through the uncertainty.
CICT noted that it will have an ongoing focus on asset enhancement initiatives and portfolio reconstitution efforts. It will continue to monitor the market for opportunities and focus on home-ground Singapore, which offers stability, for inorganic growth.
The CEO of Suntec REIT’s manager, Chong Kee Hiong, said that the continual improvement in operating performance highlights the strong fundamentals of the properties. “In light of the global macroeconomic uncertainties, we remain focused on strengthening the operating performance of our properties,” he added.
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