To The Moon

Singapore’s real estate investment trusts (S-REITs) with meaningful office exposure delivered a robust showing for the first half as operating performance remained strong while borrowing costs declined.

$Suntec Reit(T82U.SI)$ , $Keppel Reit(K71U.SI)$ and $OUEREIT(TS0U.SI)$ , which hold exposure to Singapore CBD assets reported strong growth in distributable income (DI) in their latest reporting period ended June.

Tight physical supply in core business districts, flight-to-quality, and footprint expansion from global AI players provided support for occupancy rates and positive rental reversions across key portfolio holdings.

Knight Frank noted in its Q2 2026 report that overall CBD occupancy was 95.3%, with the persistently high occupancy highlighting the enduring appeal of the CBD for office tenants. Leasing momentum during 1H 2026 was predominantly renewal-led, as occupiers weighed high capital expenditure costs against relocation. Even as churn remained low, it noted that AI-related firms were also reported to be setting up office or expanding in Singapore. 

1. $Keppel Reit(K71U.SI)$

Keppel REIT delivered strong double-digit growth, with net property income (NPI) increasing 13.1% year-on-year to S$122.5 million and DI from operations surging 25.2% to S$119.6 million.  

This was driven by improved performance from the existing portfolio, an acquisition, and higher share of joint ventures from the acquisition of an additional one-third interest in MBFC Tower 3. However, distribution per unit (DPU) slipped 4% year-on-year due to the enlarged unit base.

Keppel REIT recorded a portfolio-wide rental reversion of 12.8%. Weighted average signing rents for its Singapore CBD portfolio in the first half was S$13.14 psf per month, while expiring leases in FY26 had an average rent of S$12.24 psf per month.

2. $Suntec Reit(T82U.SI)$

Similarly, Suntec REIT demonstrated a strong performance, with distributable income rising 25.5% YoY to S$116.5 million for 1H FY26, pushing DPU up 24.8%. The robust showing was driven by stronger operational performance of the Singapore Office and Retail portfolio, lower financing costs as well as lower Australia withholding tax provision.

The REIT hit an overall committed occupancy of 99.5% across its Singapore office assets and positive rental reversion of 10.1%. Suntec REIT’s manager noted that portfolio occupancy is expected to remain high, with full year rental-reversion expected to be near 5%.

3. $OUEREIT(TS0U.SI)$

Meanwhile, OUE REIT reported a 28.6% increase in DPU to 1.26 Singapore cents for H1 2026, driven by a similar jump in distributable income, anchored by stronger hospitality performance, the income contribution from the acquisition of Salesforce Tower and significantly lower interest expenses.

Positive rental reversion stood at 4.7% for office lease renewals in the second quarter of 2026. The manager noted that tightening office supply in the CBD provides OUE REIT with a favourable window to rejuvenate its tenant portfolio, and it is carrying out a planned repositioning for OUE Downtown.

While CBD performance remained robust, ongoing supply tightness may also benefit other office assets as companies consider decentralised options.

4. $Mapletree PanAsia Com Tr(N2IU.SI)$

Mapletree Pan Asia Commercial Trust, which holds office assets mainly in HarbourFront and Alexandra precincts, noted that its Singapore portfolio remained resilient. Mapletree Business City (MBC) recorded a committed occupancy of 94.3% with a positive rental reversion of 0.8%.  

Knight Frank noted the market dynamics observed in the first six months of the year is expected to prevail in the remaining half, and likely into 2027. It added that rents are projected to increase by 3% to 5% in 2026 given the tight CBD supply, with decentralised spaces capturing spillover demand when CBD occupiers require lower cost options to accommodate growth.

DBS Group Research noted last week that their preference continues to be office and industrial REITs with positive rental reversions, strong balance sheets and visible organic growth. This includes CapitaLand Integrated Commercial Trust (CICT), Keppel REIT and CapitaLand Ascendas REIT. CICT is scheduled to announce its first half results on Aug 12.