The real estate investment trusts in Singapore are still struggling to cope with the high borrowing costs.
But the good times are coming soon.
Last week, the US Federal Reserve lowered the benchmark interest rate to between 3.5% and 3.75%.
This interest rate cut and the increase in rental income are positive signals for the future development of well-managed real estate investment trusts.
However, some people will benefit more than others.
Safety, quality, and stable cash flow will be the key factors for achieving recovery in 2026.
We have picked out three REITs that could fit the bill, namely Capitaland Integrated Commercial Trust (SGX: C38U), Frasers Centrepoint Trust (SGX: J69U), and Parkway Life REIT (SGX: C2PU).
CapitaLand Integrated Commercial Trust
CapitaLand Integrated Commercial Trust (CICT) is Singapore’s largest REIT with a portfolio of properties worth around S$26 billion, consisting of a diversified mix of high-end shopping malls and office buildings such as ION Orchard, Raffles City, and CapitaSpring.
Currently, CICT offers a decent DPU yield of around 4.8%.
One of the key reasons why CICT’s distribution per unit (DPU) can rise in 2026 is the full-year contribution from the acquisition of CapitaSpring, completed in August 2025, and further uplift from ION Orchard.
The operating metrics support its stability.
The REIT sports a solid 97.2% occupancy rate as of 2025’s third quarter (3Q2025).
In terms of debt management, CICT holds a leverage ratio of 39.2% and a decent interest coverage ratio of 3.5x, suggesting that it has a good handle on its debt refinancing.
Meanwhile, office rents have remained relatively stable in 2025.
Retail footfall and tenant sales have been on the rise the year-to-date through September 2025, adding to its positive outlook.
Frasers Cpt Tr
Speaking of retail, Frasers Centrepoint Trust or FCT focuses on suburban retail malls with a high concentration in essential spending, providing stability during challenging economic conditions.
These malls are typically located near residential areas with easy access via public transport, which helps maintain strong shopper footfall.
Some of the marquee properties include NEX, Waterway Point, and Tampines 1.
Similar to CICT, FCT is well-positioned to achieve DPU growth in 2026, driven by increasing shopper traffic, and stronger tenant sales.
Recent acquisitions, such as the Northpoint City South Wing, can boost performance by harnessing operational synergies aimed at increasing rental income.
The REIT’s operational metrics remain robust.
FCT has a strong occupancy rate of 98.1% as of the fourth quarter of the fiscal year ended 30 September 2025 (4Q FY2025) and a rental reversion rate of 7.8% for FY2025.
A potential concern is that its weighted average lease expiry (WALE) is relatively short at 1.8 years.
Nevertheless, FCT maintains a gearing ratio of 39.6%, with 83.4% of its debts having fixed interest rates.
Hence, the recent interest rate cut is expected to further ease its interest expense burden.
ParkwayLife Reit
Parkway Life REIT is a healthcare REIT with a portfolio spanning three key hospitals in Singapore, as well as nursing homes in Japan and France.
The REIT’s key characteristic is anchored by its long-term master leases with its Singapore hospitals where there are contractual mechanisms to ensure a minimum rental increase of 1% annually.
Parkway Life REIT’s rental reversion formula ensures rental growth regardless of economic conditions, which can be an indicator of DPU growth.
Furthermore, the REIT is reaching Year 4 of its master lease agreement signed in 2021 which could see its DPU increased by 27.6% year on year.
Meanwhile, recent nursing home acquisitions in Japan have added to Parkway Life REIT’s earnings base, and its strong debt management leaves room for potential accretive acquisitions.
The REIT has a low gearing at 36%, and a strong interest coverage ratio of 8.9 times, placing it in a strong position to manage debts.
While this yield may be lower than other REITs, the stable growth and predictability of Parkway Life REIT make it a worthwhile trade-off.
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