Singapore’s real estate investment trust (S-REIT) sector is gearing up for an eventful earnings season, with 24 REITs set to release financial results or business updates for the period ending December 31, 2024. This reporting season comes as analysts predict potential tailwinds for the sector, including the prospect of interest rate cuts, easing inflation, and promising earnings previews.
Busy Earnings Calendar
Of the 24 S-REITs reporting, 17 will disclose full-year financial results, five will release first-half or third-quarter results, and two will share quarterly business updates.
The season kicks off on Tuesday with Sabana Industrial REIT and Mapletree Logistics Trust (MLT). Sabana will reveal its full-year financials, while MLT will report its third-quarter results.
Performance Highlights from Sabana and MLT
Sabana Industrial REIT continues its upward momentum. Its third-quarter business updates earlier this year revealed portfolio occupancy rising to 84.9%, up from 78.8% as of September 30, 2024. New leases accounted for 313,953 square feet, while renewals covered 15,974 square feet, achieving a 9.7% positive rental reversion for renewals. Notably, Sabana has maintained positive rental reversions every quarter since Q1 2021.
MLT, on the other hand, reported a slight dip in its distribution per unit (DPU) to 4.095 Singapore cents for the first half of FY24/25. Despite this, the trust achieved a robust 96% portfolio occupancy rate and positive rental reversions across most of its markets, reflecting steady operational performance.
Sector Momentum and Early Gains
The S-REIT sector has recorded a modest 0.8% gain in the first 12 trading days of 2025. While institutional investors were net sellers in 2024, resulting in S$1.6 billion in outflows, retail investors have increasingly turned to larger S-REITs, ranking them among the top choices for net retail inflows.
Interest Rate Outlook Sparks Optimism
Potential interest rate cuts by the U.S. Federal Reserve are fueling optimism for the REIT sector. Federal Reserve Governor Christopher Waller recently suggested that the central bank could lower rates multiple times in 2025 if inflation continues to ease.
According to the CME Fed Watch Tool, markets project nearly a 50% chance of a rate cut by May 2025, with odds increasing to over 70% by June. A reduction in rates could significantly benefit S-REITs, as lower borrowing costs and improved yields make the sector more attractive to investors.
Challenges and Opportunities
Despite the positive outlook, challenges remain. Institutional outflows in 2024 highlight caution among large investors, and REITs must work to maintain competitive yields and stable operational metrics. However, with stronger earnings previews and strategic asset management, S-REITs are well-positioned to capitalize on market shifts.
What to Watch This Season
Investors will closely monitor metrics such as rental reversions, portfolio occupancy, and DPU growth to gauge sector health. Sabana and MLT’s results will set the tone for the season, providing early insights into operational resilience and growth strategies.
As the S-REIT sector navigates both challenges and opportunities, its performance this earnings season will play a pivotal role in shaping investor confidence for 2025.
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