UOB Kay Hian
Date of Report: 1 September 2025

S-REITs Poised for Growth: Analyst Upgrade and Key Catalysts in Singapore’s REIT Market

Overview: S-REITs Set to Shine as Interest Rate Cycle Turns

Singapore Real Estate Investment Trusts (S-REITs) are at a pivotal moment. With US monetary policy shifting towards easing, a revival in global liquidity is expected to benefit S-REITs, enhancing their appeal to investors. UOB Kay Hian maintains an OVERWEIGHT rating on the sector, spotlighting blue-chip names with strong catalysts and upside potential.

Market Performance and Macro Highlights

• The FTSE ST All-Share REITs Index (FSTREI) gained 2.3% in August 2025, tracking the Straits Times Index (STI).
• US core PCE inflation rose slightly by 0.1 percentage point to 2.9% year-on-year in July 2025.
• Yield for 10-year Singapore government bonds eased by 28 basis points month-on-month to 1.81% in August.

Key Corporate Actions and Portfolio Moves

CapitaLand Integrated Commercial Trust (CICT): Full Ownership of CapitaSpring

CICT is acquiring the remaining 55% stake in CapitaSpring, a prime Grade A office tower in Singapore’s CBD, from CapitaLand Development and Mitsubishi Estate Co. The transaction values CapitaSpring at S\$1.9 billion, with an entry net property income (NPI) yield of 4.2%. Expected to complete in 3Q25, this move secures 100% ownership for CICT. CapitaSpring’s key tenants include JPMorgan Chase, Millennium Capital, and Sumitomo Mitsui, with the banking, insurance, and financial services sector accounting for 61% of gross rental income as of June 2025.

CapitaLand Ascendas REIT (CLAR): Expanding UK Logistics Portfolio

CLAR is acquiring two freehold land plots in the East Midlands, UK—a major logistics hub. The total investment of £203.5 million (S\$350.1 million) will be used to develop four logistics properties, enhancing CLAR’s UK logistics exposure by 43.5% to S\$1.2 billion. The first-year NPI yield is projected at 7.3% pre-transaction costs and 6.9% post-costs, capitalizing on e-commerce growth and onshoring trends.

Lendlease Global Commercial REIT (LREIT): Jem Office Divestment

LREIT is divesting the office component of Jem (12 levels, 311,000 sf, 35% of total NLA) for S\$462 million. The space is leased to the Ministry of National Development for 30 years (WALE: 19.4 years) with an exit NPI yield in the low-4% range. The estimated divestment gain is S\$8.9 million, with the transaction expected to complete in 2QFY26. Pro forma FY25 DPU will be reduced by 2.2%, but aggregate leverage will fall sharply from 42.6% to 35%.

Top S-REIT Picks and Target Prices

UOB Kay Hian’s top picks combine robust fundamentals with clear catalysts.

S-REIT Sector Ratings by Segment

All major segments—healthcare, hospitality, industrial, office, and retail—are rated OVERWEIGHT, reflecting broad-based optimism across the REIT universe.

Vital Statistics: Top 20 S-REITs by Market Capitalisation

Below is a snapshot of the largest S-REITs, including their distribution yields, leverage, and valuation multiples.

Peer Comparison: Sector-by-Sector Yield, Leverage, and Valuation

The following table compares S-REITs across healthcare, hospitality, industrial, office, retail, diversified, and international segments, showcasing yields, leverage ratios, and price-to-net asset value (P/NAV):

Performance Leaders and Laggards: Monthly and Year-to-Date

• Top Outperformers: Suntec REIT (+11.9%), Lendlease REIT (+8.1%), OUE REIT (+8.1%), Mapletree Pan Asia (+7.1%), and CapLand Int Comm Trust (+3.2%).
• Top Underperformers: IREIT Global (-6.2%), CDL HTrust (-5.9%), Digi Core REIT USD (-4.2%), CapLand China Trust (-3.8%), and CapLand Ascendas (-3.5%).

Yield and Valuation Rankings

Distribution yields vary widely within the sector, with the highest forward yields found among diversified and international REITs. The following list highlights the highest and lowest distribution yields, as well as current P/NAV multiples:

• Highest Forward Yields: Stoneweg REIT (8.8%), NTT DC REIT (8.3%), ESR-REIT (7.9%), CapLand Ascott CLAS (7.2%), Starhill Global (7.0%).
• Lowest P/NAVs: OUE REIT (0.6x), Suntec REIT (0.7x), CapLand China Trust (0.7x).
• Highest P/NAVs: PLife REIT (1.7x), Keppel DC REIT (1.5x), CapLand Ascendas (1.2x).

Segment Outlook and Investment Strategy

Every major S-REIT segment is rated OVERWEIGHT, underpinned by:

• Favorable macro tailwinds from a potential rate cut cycle
• Structural demand, especially in logistics and data centers
• Special situations such as portfolio optimization and asset recycling

The broker’s strategy is to focus on blue-chip S-REITs with visible catalysts—such as accretive acquisitions, asset enhancements, or capital recycling—and to remain alert for tactical opportunities among yield leaders and undervalued names.

Conclusion: S-REITs Are Attractive in a Rate-Easing Environment

With major monetary policy shifts on the horizon, S-REITs are well-positioned for a rebound. Investors should focus on sector leaders with strong fundamentals, visible growth drivers, and prudent leverage. The market’s breadth of opportunity—from logistics and office to retail and hospitality—offers attractive options for yield-seeking and growth-oriented investors alike.

Broker Contact

• Analyst: Jonathan Koh, CFA, MSc Econ
• UOB Kay Hian Private Limited
• Email: [email protected]