Money and Me: S-REITs Are Back - But Not All Recoveries Are Equal

The episode opens with a clear link between Singapore’s low SORA range (1.2‑1.3%) and the upcoming earnings upgrade for S‑REITs in 2026‑27. Lower borrowing costs allow many REITs to refinance expiring debt, reducing interest drag and supporting higher distributions per unit (DPU). The IHS REIT Leaders Index posted a 16.3% total return last year, its best performance since 2019, underscoring the sector’s resilience but also signalling a shift from pure balance‑sheet stability to growth‑oriented agility.

Kenny Lowe separates the market into two archetypes: “balance‑sheet technicians” that focus on debt reduction and flat DPU, and “growth architects” that leverage strong interest‑coverage ratios to acquire high‑growth assets such as data centres, modernised malls, and logistics hubs. He highlights three sub‑sectors with the most operational strength – digital real estate (data centres), suburban retail with near‑full occupancy, and hospitality riding post‑pandemic tourism. The recovery is fragmented: Singapore‑centric assets benefit from limited supply and strong demand, while REITs heavily exposed to overseas office markets, especially the US, continue to face headwinds.

For investors, Lowe outlines four playbooks: dividend plays (large‑cap REITs with 4‑6% yields), alpha plays (undervalued overseas‑exposed REITs offering 7‑9% yields but higher currency risk), recovery plays (U.S. office REITs poised for dividend reinstatement), and speculative plays (illiquid small‑cap REITs trading at deep discounts). He also flags upcoming budget expectations – green‑retrofit incentives, longer industrial lease terms, and data‑centre energy subsidies – as potential catalysts that could boost NAV and dividend growth across the sector.