Money and Me: The S-REIT Comeback - Income, Upgrades and What to Buy in 2026

Singapore REITs may finally be turning the corner.

Singapore REITs enter 2026 at a pivotal moment say's Kenny Loh, as interest-rate cuts revive sentiment and valuations remain below historical averages.

After delivering a near-23% gain in 2025 - their best run since 2019 - analysts expect a two-year earnings upgrade cycle driven by falling borrowing costs and rising distributions.

We unpack which REITs face refinancing risks, how balance sheets are being managed, and where higher interest coverage offers protection.

From industrial and logistics to retail, offices and data centres, we assess which property sub-sectors look resilient - and which still face headwinds.

We also ask whether current price-to-NAV discounts present compelling entry points, or if markets are still pricing in too much caution.

Joining us is Kenny Loh, REIT Specialist and Wealth Advisory Director, as we discuss strategy, risks and specific S-REITs on the radar for 2026, hosted by Michelle Martin.

1. The 2026 Outlook: A "Turning Point" Year

The narrative for 2026 is one of recovery and transition. After two years of "restrictive" interest rates, the sector is entering what analysts call a two-year earnings upgrade cycle (2026–2027). 3 Key Turning Points Below:

1. Rate Cut Impact: With the US Fed and domestic 3M SORA rates projected to settle around 1.2%–1.3% in 2026, the "cost-of-debt" drag is finally reversing.
2. Dividend Uplift: Markets are forecasting low single digit uplift in DPU (Distribution Per Unit) as REITs replace maturing high-interest loans with cheaper financing.
3. Price Potential: I anticipate a potential 10-15% price upside across the sector as yields normalize and the spread over Singapore 10-year government bonds remains healthy (approx. 3.7–3.9 percentage points).

2. Refinancing Risks & Management

While the outlook is positive, the "refinancing wall" remains a hurdle for those with poor capital structures.

• Most Exposed: Watch REITs with gearing ratios above 40% or those with significant debt maturing in early 2026.
  • High Risk: Manulife US REIT (56% Gearing) and Prime US REIT (US office exposure) – 46% Gearing and EC World REIT (71% Gearing) continue to face structural gearing challenges.
• Management Strategies:
  • Fixed-Rate Hedging: REITs probably will start reducing the percentage of fixed rate hedge to ride on the immediate impact of lower interest rate. Leaders like Frasers Centrepoint Trust (FCT) have over 80% of their debt on fixed rates with 3.2 Years WADM, is unlikely to have huge and surprise uplift in term of DPU.
  • Asset Recycling: REITs are divesting non-core assets to pay down debt.
  • Proactive Refinancing: Many are securing "green loans" early to lock in sustainability-linked discounts.

Which property sub-sectors (e.g., industrial, retail, office, hospitality, data centers, healthcare) do you believe have the strongest fundamentals and growth prospects for 2026, and which remain challenged?

4. Valuations: Is it an Entry Point?

Yes, for long-term investors.

• Price-to-NAV: The S-REIT sector is trading at roughly 0.86 P/NAV, which is below the 10-year average of 1.0x with 5.4% DPU Yield
• Caution vs. Opportunity: While the market is no longer "dirt cheap" compared to 2023, it is currently "fairly valued to slightly undervalued." The market has likely priced in some caution regarding global growth, leaving room for surprises on the upside if rate cuts are more aggressive than expected.
• Not all the REITs are cheap now:
  • CICT is trading at +2 standard deviation of 5 Years Average P/NAV.
  • Keppel DC REIT is trading slightly below 5 Years Average P/NAV.
  • Frasers Centerpoint is trading at fair value of 5 Years Average P/NAV.
  • Digital Core REIT is trading at -1 standard deviation of 3 Years Average P/NAV.

5. Primary Downside Risks

Beyond interest rates, the "Gray Swans" for 2026 include:

1. Slower Economic Growth: Singapore's GDP is projected to moderate to 1.0%–3.0%, which could dampen tenant demand.
2. Trade & Geopolitics: Potential US tariff policies and trade tensions could impact industrial/logistics REITs tied to global trade.
3. Consumer Sentiment: If inflation remains sticky, discretionary spending in high-end retail (like Orchard Road) may soften, even as suburban malls stay strong.

6. Recommended Strategy: The "Barbell" Approach

For a retail investor in 2026, a Balanced Approach is safest:

• The Core (60-70%): Focus on Defensive Income. Look for blue-chip REITs with high-pedigree sponsors (CapitaLand, Frasers, Mapletree). DPU Yield Between 4-5%.
• The Satellite (30%): Chase Structural Growth in Data Centers or recover-themed such as Hospitality REITs, REITs with oversea portfolio to capture capital appreciation as rates fall.

S-REITs on the "Watchlist" (2026 Selection)

1. CapitaLand Integrated Commercial Trust (CICT): The "blue chip" for core stability.
2. Keppel DC REIT: To play the AI and digital infrastructure theme.
3. Frasers Centrepoint Trust (FCT): Best-in-class for defensive suburban retail.
4. ParkwayLife REIT: For long-term, recession-proof healthcare income.
5. United Hampshire US REIT: A US Retail Grocery Malls which trading at discount and attractive DPU yield of 8%, relatively short WADM of 1.6 years.