SREITs set for stable Q1 performance, CGSI says

Occupancy holds firm as investors watch rents, debt costs and inflation risks.

Singapore Real Estate Investment Trusts (SREITs) are expected to deliver stable operating performance in the upcoming first quarter (Q1) of 2026 results season, according to CGS International (CGSI).

The brokerage maintained an Overweight rating on the sector, noting a 5% year-to-date decline, largely driven by developments linked to Middle East tensions.

CGSI said markets will focus on management commentary on demand trends, rental reversions, and debt cost guidance, alongside the impact of higher oil prices on inflation expectations and interest rate outlook for 2026.

Portfolio occupancy across Singapore-centric SREITs is expected to remain high, supported by steady leasing demand whilst weakness is expected in Singapore business parks and selected US office-related assets, according to the report.

Rental reversions are expected to remain positive across office, retail, and industrial segments, excluding China. Hospitality REITs are also expected to record positive RevPAR growth, supported by stronger visitor arrivals.

Interest cost savings are expected to continue for most SREITs, supported by existing hedging and long-dated utilities contracts extending through 2026 or beyond.

Key beneficiaries highlighted include CapitaLand Integrated Commercial Trust, Keppel DC REIT, Mapletree Logistics Trust, Lendlease Global Commercial REIT, and Frasers Centrepoint Trust.

Industrial REITs remain relatively insulated from higher energy costs due to pass-through structures and hedging. Occupancy is expected to stay high, although business parks and selected overseas assets may moderate.

Retail REITs remain stable. URA data showed 0.6% quarter-on-quarter (QoQ) rental growth in the fourth quarter of 2025, whilst vacancy eased to 6.3%. Retail sales rose 3.5% year on year in January to February 2026, with channel checks indicating steady demand in Q1 2026.

Office REITs continue to benefit from tight supply. Grade A office rents rose 0.8% QoQ in Q1 2026, with occupancy expected to remain above 90% to 95%. Leasing activity remains stable despite geopolitical caution.

Hospitality REITs are expected to post higher RevPAR in Q1 2026, supported by stronger early-year visitor arrivals. Forward booking visibility remains short, making near-term guidance a key focus.

CGSI maintained its Overweight rating, citing a 5.7% FY2026F yield and a 350bp spread over 10-year Singapore government bonds.

Preferred names are CapitaLand Integrated Commercial Trust, CapLand Ascendas REIT, and Suntec REIT. Key risks include slower global growth, higher funding costs, and renewed inflation pressures.

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