Broker: CGS International
Date of Report: July 30, 2025

Singapore REITs: Robust Performance with Lower Financing Costs and High Occupancy Drive Sector Optimism

Overview: Key Highlights from the Latest Singapore REITs Earnings

Singapore’s Real Estate Investment Trusts (SREITs) sector continues to demonstrate resilience and growth, with several leading trusts releasing their latest financial results. According to the latest report by CGS International, KREIT and SGREIT delivered results in line with expectations, while CDREIT and FEHT posted numbers below consensus. A notable trend across the board is the continued decline in the cost of debt, underpinning optimism for further gains as interest rates ease.

Keppel REIT (KREIT): Strong Rental Reversion and High Occupancy

• 1H25 DPU: 2.72 Singapore cents, in line with forecasts, representing 50.2% of FY25 projections but down 2.9% year-on-year due to the manager taking 25% of fees in units from FY25 onward.
• Revenue/NPI Growth: Revenue rose 9.1% and Net Property Income (NPI) jumped 11.8%, buoyed by contributions from 255 George Street and improved occupancy at 2 Blue Street.
• Portfolio Occupancy: A robust 95.9%, with a stellar +12.3% rental reversion.
• Leasing Activity: 0.56 million sq ft leased in 1H25, with primary demand from financial institutions, technology, media and telecom (TMT), real estate, and manufacturing and distribution sectors.
• Aggregate Leverage: 41.7%.
• Cost of Debt: 3.51% in 1H25 (down 1 basis point quarter-on-quarter).
• Current Rating: Add, with a target price of S\$1.08.

CDL Hospitality Trust (CDREIT): Impacted by Renovations and Market Softness

• 1H25 DPU: 1.98 Singapore cents, below expectations at 38% of FY25 forecast. S\$2.2 million of distributable income was retained for working capital.
• Revenue/NPI: 44% and 40% of full-year forecasts, respectively.
• Gross Profit: Down 9% year-on-year, attributed to weaker Singapore performance (-18% y-o-y) in 1H25 due to renovations at W Singapore and 2Q25 RevPAR decline of 12.4%. Softness in New Zealand, Maldives, Italy, and UK portfolios was partially offset by acquisitions in Japan and UK.
• Singapore Contribution: Accounted for approximately 57% of NPI in 1H25.
• RevPAR: Averaged S\$165 in 1H25. Australia, Japan, and Germany saw year-on-year growth in RevPAR.
• Finance Costs: Increased to S\$6.7 million in 1H25, mainly due to acquisitions. 47.2% of debt was hedged to fixed rates (up from 33.8% in March 2025).
• Gearing: Stable at 42% (41.8% in March 2025), all-in financing cost declined to 3.6% (from 3.9% in March 2025).
• Current Rating: Add, with a target price of S\$0.87.

Far East Hospitality Trust (FEHT): Softer Hotel Metrics but Improved Cost Management

• 1H25 DPU: 1.78 Singapore cents, slightly below expectations (46% of FY25 forecast); included a distribution top-up of S\$5.4 million.
• Revenue/NPI: 46% and 45% of full-year forecasts, respectively.
• Gross Profit: Fell 7.7% year-on-year due to softer performance and higher property expenses in Singapore hotels and serviced residences. This was partially cushioned by increased occupancy and rental rates at commercial premises and new contributions from Four Points by Sheraton Nagoya (acquired April 2025).
• Finance Expense: Fell by S\$2.4 million year-on-year.
• Singapore Hotels RevPAR: Down 5.7% year-on-year to S\$133 due to lower average daily rates.
• Singapore Serviced Residences RevPAR: Down 6.5% year-on-year to S\$211, dragged by lower occupancy.
• Gearing: Higher at 32.8% (up from 31.2% in March 2025), with all-in financing cost declining to 3.4% (from 3.5%). Interest Coverage Ratio (ICR) improved to 3.1x (from 2.9x).
• Current Rating: Add, with a target price of S\$0.74.

Starhill Global REIT (SGREIT): Stable Retail and Office Performance

• 2HFY6/25 DPU: 1.85 Singapore cents, in line at 50.7% of FY25 forecast. Full year DPU of 3.65 Scts matches the forecast.
• 2HFY25 Revenue: Up 0.7% year-on-year to S\$95.8 million; NPI remained flat at S\$74.5 million with higher Singapore retail contributions offset by divestment of Wisma Atria office strata units and rental arrears provision for the China asset.
• Occupancy: Office portfolio at 94.6%, retail at 97.3%.
• Gearing: Stable at 36%.
• Cost of Debt: 3.67%.
• Current Rating: Add, with a target price of S\$0.60.

Peer Comparison: Key Financial Metrics

Dividend Yields and Valuations: Sector Overview

The following table summarizes dividend yields and valuations for key SREITs across hospitality, industrial, office, and retail segments:

Sector Outlook: Overweight Stance with Re-Rating Catalysts

• CGS International maintains an Overweight rating on the SREIT sector, anticipating that the full benefits of lower interest rates are yet to be priced in.
• Top sector picks include Keppel DC REIT (KDCREIT) and CapitaLand Ascendas REIT (CLAR), which are positioned to benefit from structural trends and robust fundamentals.
• Key re-rating catalysts include accelerated declines in interest rates and continued strong operational performance.
• Risks include slower-than-expected interest rate cuts, which could delay sector re-rating.

Conclusion: SREITs Remain Attractive Amid Lower Financing Costs and High Occupancy

The latest financial results reinforce the attractiveness of Singapore’s REIT sector, with most trusts maintaining high occupancy, demonstrating resilience in operating metrics, and benefitting from declining financing costs. While some trusts face operational headwinds, overall sector fundamentals remain solid, and the outlook is positive for investors seeking stable income and long-term growth.
For detailed information, investors are encouraged to review each REIT’s performance metrics and evaluate the ongoing shifts in the interest rate environment as a key driver of future performance.