Singapore REIT News Analysis [4th Week of April 2025]

Market Trends

The Singapore REIT market is showing signs of potential recovery amid global economic uncertainty.

Institutional investors have turned net buyers of S-REITs over recent weeks, marking a reversal of the outflows experienced for much of 2024 according to OCBC's analysis The Edge Singapore. This shift in buying behavior suggests growing investor confidence in the defensive nature of REITs during times of market volatility.

A significant trend observed is the falling cost of debt, with the Singapore 10-year Government Bond yield easing to 2.47% as of early April, down from 2.86% at the start of the year The Edge Singapore. This decline in interest rates creates a favorable environment for REITs, potentially reducing their borrowing costs and improving distributions per unit (DPU) performance.

However, the market has faced recent turbulence following former US President Trump's proposed tariffs on global goods, which triggered a sell-off in S-REITs. Analysts warn that these tariff policies could have ripple effects on REITs' bottom lines by increasing the likelihood of a global recession, potentially leading to higher vacancy rates and lower rental growth Business Times.

Despite these concerns, CGS-International (CGSI) suggests it's time to switch into S-REITs, forecasting distribution per unit growth of 1% in 2025 as interest rates start to pivot The Edge Singapore. Their analysis points to a potential scenario resembling the 2018 downcycle during "Trump 1.0," where investors adopted risk-off strategies favoring companies with earnings certainty.

In terms of sub-sector performance, retail REITs are expected to outperform other categories due to strong demand for prime retail space amid tight supply Business Times. Conversely, hospitality REITs may face headwinds without the boost from major events that drove performance in early 2024, making organic demand recovery an important indicator for the sector's resilience.

Portfolio Activities

Stoneweg European REIT – Secured major lease renewals with Motorola Solutions and Coolblue BV spanning approximately 27,000 square meters in the Netherlands and Poland. The renewals will extend the weighted average lease expiry of the REIT's office portfolio by almost six months, reaching 5.3 years Business Times.
CapitaLand Investment – Launched its first retail REIT in China with assets worth 2.8 billion yuan, offering its existing China-based REIT (CLCT) an opportunity to diversify income and enhance portfolio quality Business Times.
CICT – Plans to conduct an asset enhancement initiative on Tampines Mall in Q4 2025 The Edge Singapore.
Digital Core REIT – Completed an acquisition of a 20% interest in a second data centre on its sponsor's Osaka connected data centre campus in Q1 2025 The Edge Singapore.
Mapletree Logistics Trust – Completed divestments of three properties in Malaysia and announced divestments of another three properties in Malaysia and Singapore as part of its portfolio rejuvenation strategy Business Times.

Financial Updates

Keppel DC REIT – Q1 DPU increased by 14.2% to S$0.02503, driven by acquisitions of Keppel DC Singapore 7 and 8, Tokyo Data Centre 1, and higher contributions from contract renewals. Distributable income rose 59.4% to S$61.8 million, with revenue up 22.6% and NPI growth of 24.1% Business Times.
Sabana Industrial REIT – Reported a 26.5% year-on-year growth in Q1 DPU to S$0.0086, led by 22% growth in NPI and 4.6% growth in gross revenue. Portfolio occupancy improved to 86.4% with a high tenant retention rate of 99.7% and double-digit rental reversion of 15.3% Business Times.
Suntec REIT – Posted a 3.4% rise in Q1 DPU to S$0.01563, with revenue up 3.4% to S$113.5 million and NPI increasing 5% to S$77.1 million. Distributable income rose 4.3% year-on-year to S$45.9 million Business Times.
MPACT – Q4 DPU tumbled 14.8% to S$0.0195, with revenue falling 6.8% to S$222.9 million and NPI dropping 7.4% to S$169.5 million. Full-year DPU was S$0.0802, down 10% from the previous year Business Times.
OUE REIT – Reported an 11.9% fall in Q1 revenue to S$66 million, primarily due to the divestment of Lippo Plaza in Shanghai and lower contributions from the hospitality segment. NPI fell 12.1% to S$53.2 million Business Times.
Digital Core REIT – Reported a distributable income of US$11.7 million for Q1, up 9.9% year-on-year. Revenue increased 79.9% to US$44.2 million, with NPI up 41.8% to US$22.4 million The Edge Singapore.
Mapletree Logistics Trust – Q4 DPU fell 11.6% to S$0.01955, with gross revenue dipping 0.8% to S$179.6 million and NPI falling 1.6% to S$152.8 million. Full-year DPU dropped 10.6% to S$0.08053, affected by higher borrowing costs and lower divestment gains Business Times.
Parkway Life REIT – Reported a DPU of 3.84 cents for Q1, up 1.3% year-on-year from an enlarged unit base SGinvestors.io.
CICT – Reported a 0.8% lower NPI of S$291.5 million for Q1, affected by the divestment of 21 Collyer Quay The Edge Singapore.

The Q1 2025 earnings season reflects mixed results across the REIT sector, with data centres and retail REITS generally showing resilience, while some office and hospitality REITs face challenges from changing tenant behaviors and economic uncertainties. The sector will continue to navigate the impact of potential global recession risks, trade tensions, and interest rate movements in the coming quarters.

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