Singapore – As uncertainty looms over the global trade order with US President Donald Trump imposing broad import tariffs on over 180 countries, the Real Estate Investment Trust (REIT) sector is also not immune to dampened investor sentiment. In particular, despite a 90-day grace period for reciprocal tariffs, the high tariff rate of 125% applied to China is amplifying concerns about the potential outbreak of a trade war.

In this environment, income investors should focus on REITs with robust sponsors and high-quality asset portfolios that can withstand market volatility. Accordingly, this publication highlights four Singapore REITs that could serve as stable investment options amidst the potential waves of a trade war.

1. OUE REIT (SGX: TS0U):

OUE REIT is a mixed retail, commercial, and hospitality REIT with six properties in Singapore. Its key assets include the office buildings OUE Bayfront, One Raffles Place, and OUE Downtown; the hotels Hilton Singapore Orchard and Crowne Plaza Changi Airport; and the upscale retail mall Mandarin Gallery. As of December 31, 2024, its Assets Under Management (AUM) amounted to S$5.8 billion.

OUE REIT benefits from the strong sponsorship of OUE Limited (SGX: LJ3), a real estate and healthcare group. As of December 31, 2024, OUE Limited held a real estate portfolio worth S$9.3 billion and managed funds totaling S$7.9 billion.

OUE REIT recorded solid performance in 2024, with revenue increasing by 3.7% year-on-year to S$295.5 million. Net Property Income (NPI) saw a slight decrease to S$234.0 million, while Distribution Per Unit (DPU) was S$0.0206, a 1.4% drop from the previous year.

The operating performance across business segments remained healthy. The office segment achieved a high occupancy rate of 94.6% and a robust rental reversion of 10.7% upon lease renewals in 2024. The hotel segment's revenue increased by 8.9% year-on-year in 2024, with Revenue Per Available Room (RevPAR) also rising by 9.2%. Mandarin Gallery recorded a high occupancy rate of 98.2% and achieved approximately 20% rental reversion upon lease renewals.

2. Parkway Life REIT (SGX: C2PU):

Parkway Life REIT (PLife REIT) is a healthcare REIT with a diversified portfolio comprising three hospitals in Singapore, 60 nursing homes in Japan, and 11 nursing homes in France. As of December 31, 2024, its AUM was approximately S$2.46 billion.

Given that healthcare is an essential demand sector, PLife REIT is expected to be relatively safe from the impact of Trump's tariffs and a trade war. Furthermore, it has a strong track record of 17 consecutive years of core DPU growth since its IPO in 2007.

PLife REIT is strongly supported by IHH Healthcare Berhad (SGX: Q0F), a healthcare conglomerate operating over 80 hospitals in 10 countries.

Its 2024 performance showed mixed results, with a slight decrease in gross revenue and NPI due to the impact of the weaker Japanese Yen, but DPU increased by 1% year-on-year to S$0.1492. The gearing ratio is healthy at 34.8%, and the cost of borrowing is low at 1.48%. There are no refinancing needs until September 2026.

3. Frasers Centrepoint Trust (SGX: J69U):

Frasers Centrepoint Trust (FCT) is a retail REIT comprising nine retail malls and one office building in Singapore. As of December 31, 2024, its AUM reached S$7.1 billion.

FCT's retail malls are primarily located in suburban areas catering to Housing & Development Board (HDB) residents, providing an advantage of stable shopper traffic and tenant sales even during economic downturns.

FCT's gross revenue and NPI for the financial year 2024 decreased by 4.9% and 4.6% year-on-year, respectively, mainly due to the impact of the Asset Enhancement Initiative (AEI) at Tampines 1 and the divestment of Changi City Point. Excluding these impacts, revenue and NPI would have increased by 3.5% and 3.4%, respectively. The DPU for FY2024 was S$0.12042, a slight decrease of 0.9% year-on-year.

FCT recently announced the acquisition of the South Wing of Northpoint City for S$1.17 billion, which is expected to contribute to DPU accretion. It is also undertaking an AEI at Hougang Mall, which is expected to yield a return on investment of approximately 7%.

4. Starhill Global REIT (SGX: P40U):

Starhill Global REIT (SGREIT) is a retail and office REIT with nine properties located in Singapore, Australia, Malaysia, Japan, and China. As of December 31, 2024, its portfolio value was approximately S$2.8 billion.

SGREIT is backed by YTL Corporation Berhad (KLSE: 4677), an integrated infrastructure developer with total assets of RM89.9 billion as of December 31, 2024.

SGREIT reported a solid performance for the first half of FY2025, ended December 31, 2024. Gross revenue increased by 1.7% year-on-year to S$96.3 million, and NPI rose by 1.6% to S$75.6 million. DPU increased by 1.1% year-on-year to S$0.018.

SGREIT has stable revenue visibility with over half of its lease agreements containing periodic rent review clauses. As of December 31, 2024, its portfolio occupancy rate remained high at 97.7%. The gearing ratio is reasonable at 36.2%, and 83% of its borrowings are hedged at fixed interest rates, providing strong resilience against interest rate hikes.

SGREIT continues to improve its mall tenant mix and is driving rental income growth through the AEI at Wisma Atria.

Conclusion:

Amidst escalating trade war concerns stemming from President Trump's tariff policies, the four Singapore REITs mentioned above possess strengths such as strong sponsors, essential healthcare assets, domestic-focused retail portfolios, and diversified geographical portfolios, which could mitigate external shocks and provide stable returns. Investors can make informed investment decisions in an uncertain market environment by closely analyzing the business models and financial health of these REITs.