In a previous write-up, I examined the characteristics of several high-performing REITs and found a few recurring themes:
- Leverage ratios below 40%
- Active portfolio rebalancing and asset enhancement
- High occupancy ratios
- Borrowing on fixed interest terms
- Exposure to consumer-driven economies in Asia
These traits have helped REITs stay resilient, even as headwinds mounted. I continue to favour REITs that align with these structural strengths. Furthermore, in 2025, we are seeing an important macro shift—the depreciation of the US dollar, which may open the door for rate cuts globally. This is particularly relevant for REITs with overseas exposure, as falling local interest rates can ease debt burdens and increase net property income.
With the USD weakening, monetary loosening outside the US is becoming more feasible. For instance, Asian and European central banks have room to pivot to pro-growth stances. This could revive investor appetite for yield instruments like REITs—especially those operating in jurisdictions with constrained real estate supply.
Another under-appreciated factor that could make certain REITs attractive in 2025 is their operating geography—particularly in certain European cities and Singapore, where real estate supply is constrained, as illustrated in the table below.
Unlike cyclical interest rate movements, supply-side restrictions are long-term and structural, often due to zoning laws, regulatory red tape, environmental protection, and geographic limits. These constraints reduce the risk of oversupply and provide REITs operating in these areas with pricing power and long-term rental growth potential.
Singapore and some European Cities with Notable Supply Constraints:
REITs with assets in these cities benefit from supply-driven tailwinds that are not easily disrupted by cyclical downturns. Even if interest rates remain elevated, strong tenant demand and low vacancy risks support stable cash flows and long-term NAV growth.
Another emerging theme for 2025 is the geopolitical and travel shift. With the US facing economic and political uncertainties—and travel demand softening—Asia is increasingly becoming the preferred destination for both tourists and capital. This could support REITs focused on Asia’s:
- Retail and hospitality segments (e.g., in Singapore, Japan, and South Korea)
- Logistics and data centers that support growing consumption and digital infrastructure
- Urban residential demand, especially in countries with large middle classes and rising urbanization
A renewed influx of travelers and spending in Asia could catalyse a rebound in REITs exposed to consumer and hospitality assets.
The REITs that we will be talking about are operating in the following regions.
Below are the 9 REITs that have positive gains this year (as of 16 May 2025) and I have added a short summary of their business summaries and latest operations.
1. Acro H-REIT (+12.5%)
Acro H-REIT, a hospitality trust saw a reduction in the number of hotels and rooms from FY2023 to FY2024 — suggesting portfolio rebalancing through asset reduction. Occupancy stood at 68.7% in FY2024. It has a gearing ratio of about 39.1% and 47.5% of its debt is hedged to fixed rates, offering strong protection for its operations. The REIT have various recently finished asset enhancement initiatives in the US which may be able to bring value if tourism in the US remains resilient.
2. CapitaLand Ascendas REIT (CLAR) (+1.15%)
CLAR maintains a solid financial profile with an aggregate leverage of 37.6% as at 31 March 2025. It is engaged in substantial portfolio rebalancing and asset enhancement, with six ongoing projects valued at S$498.4 million. The strategy focuses on growth sectors—Business Space, Life Sciences, Data Centres, and Logistics—in markets including Singapore, the U.S., Australia, and the UK/Europe. While overall occupancy is not disclosed, 82.7% of debt is on fixed rates, aiding in interest rate risk management. With 65% of its asset value in Singapore, CLAR has deep exposure to the Asian consumer economy through its industrial and commercial assets.
3. CapitaLand Integrated Commercial Trust (CICT) (+5.64%)
CICT has a low aggregate leverage of 38.7% as at 31 March 2025. Its occupancy rate is about 96.4%, with an increase in rent reversion which is beneficial for its operations. The REIT actively reviews Asset Enhancement Initiative (AEI) opportunities and pursues inorganic growth in Singapore. Its average cost of debt remains manageable at 3.4%. CICT’s portfolio, focused on retail and office properties in Singapore, also has exposure to other countries like Germany and Australia.
4. Elite UK REIT (+5.17%)
Elite UK REIT focuses on income-producing real estate in the United Kingdom, primarily social infrastructure leased to the UK Government. Although it has not yet reached a gearing ratio below 40%, it has been actively managing its capital structure. The Net Gearing ratio improved from 47.5% as at 31 December 2023 to 42.5% as at 31 December 2024, with a long-term target of under 40%. Strategic capital management initiatives included reducing borrowings by approximately £45 million through fundraising and capital recycling from dilapidation settlements and divestments. The REIT pursues portfolio rebalancing and asset enhancement through reletting, repositioning, or recycling of assets.
Expanding its focus, the REIT now includes Living Sector assets such as Student Housing and Build-to-Rent residential properties. The portfolio maintained a high occupancy rate of 93.9% as at 31 December 2024. To mitigate interest rate risk, the REIT increased its fixed-rate debt proportion to 86% in 2024, up from 63% a year prior. Its assets are concentrated in the UK, with no reported exposure to Asia’s consumer-driven economies.
5. Frasers Centrepoint Trust (FCT) (+3.3%)
FCT is a pure-play suburban retail REIT in Singapore with strong consumer exposure. It maintains a leverage of 39.3% in 1Q25 and enjoys a committed occupancy rate of 99.5%. The REIT actively manages its assets to increase shopper traffic and tenant sales. The fixed-rate debt proportion is not detailed, but the retail-centric focus makes its performance highly dependent on local consumer spending in Singapore.
6. Frasers Hospitality Trust (FHT) (+21.05%)
FHT had a gearing ratio of 34.8% as at 31 March 2025. It follows a proactive asset strategy including divestments, yield-accretive acquisitions, and enhancements. While overall occupancy declined slightly in recent earnings, 72.8% of debt is on fixed rates. As a hospitality REIT, FHT is inherently tied to travel and leisure spending. Its properties are spread across markets using AUD, EUR, GBP, and JPY, with exposure to Asia through its Japanese assets, aligning it with regional consumer activity. We have also previously mentioned its delisting offer in a separate write up.
7. Parkway Life REIT (PLife REIT) (+9.57%)
PLife REIT maintains gearing at 36.1% as at 31 March 2025 and has significant debt headroom. It is actively rebalancing its portfolio, including the divestment of its Malaysia portfolio, and seeks to build a third key market. Committed occupancy is 100% across core assets in Singapore, Japan, and France. The REIT has hedged approximately 90% of its interest rate exposure. Its healthcare-focused portfolio serves core consumer needs in medical and elder care, particularly in Singapore (65.1%) and Japan (28.1%).
8. Sabana Industrial REIT (+1.39%)
Sabana Industrial REIT had an aggregate leverage of 37.8% as at 31 March 2025. However, auditors flagged a net current liabilities position due to maturing loans, indicating near-term financial challenges in refinancing if it is unresolved. Occupancy stood at 86.4% in 1Q 2025 which is not the most ideal but has been improving since the last few quarters. It has about 72.6% of borrowings at fixed rate. Based in Singapore, the REIT’s industrial, logistics, and business park assets contribute to supporting supply chains and economic activities tied to consumption.
9. Paragon REIT (+9.55%)
Paragon REIT reported gearing of 35.3% in FY2024 and a high occupancy rate of 97.5%, with Singapore assets at 99.6% and Australia at 96.4%. Approximately 70% of debt is on fixed terms. The REIT is focused on retail properties and has plans for asset enhancement and exercising its Right of First Refusal (ROFR) for future assets in Asia Pacific. With a portfolio concentrated in Singapore and Australia, Paragon REIT has direct exposure to consumer spending.
Final Thoughts
Overall, the broader market is increasingly pricing in the likelihood of interest rate cuts occurring in the second half of the year rather than the first. Should this materialise, it would provide a more supportive environment for REITs, particularly by lowering financing costs and improving investor sentiment. However, caution remains warranted. The U.S. The Federal Reserve is likely engaging with moderated quantitative tightening, as its balance sheet is shrinking to the lowest level in five years. The broader implications of this ongoing liquidity withdrawal on capital flows are still uncertain on a global level.
Given these dynamics, I prefer REITs that operate in cities characterised by strong urbanisation trends and limited real estate supply, such as Singapore and London. These markets tend to maintain high occupancy rates and offer greater asset resilience, even during periods of economic uncertainty. Among the various sectors, healthcare REITs appear especially defensible due to the essential nature of their services and their generally stable demand, making them a particularly resilient option in today’s complex macroeconomic landscape.
Join us to find out how Chris Ng uses his dividend income from REITs to support his family after he FIRE’d at the age of 39. Register here.
