The REIT sector is grappling with lingering headwinds as interest rates look poised to stay “higher for longer”.
The good news is that REITs are not standing still.
REIT managers are engaging in capital recycling or asset improvement works to enhance the quality of their REIT portfolios.
With the above in mind, here are four interesting REITs to watch for that have undertaken some of these initiatives.
Stoneweg Europe Stapled Trust (SGX: SET)
Stoneweg Europe Stapled Trust, or SERT, owns a portfolio of over 100 predominantly freehold properties in countries such as the Netherlands, Italy, France, Poland, and others.
SERT’s portfolio has a total lettable area of around 1.7 million square metres and is valued at €2.2 billion.
SERT entered into a binding offer to divest Arkonska Business Park in Poland for €7.8 million.
This is a non-core office asset and is consistent with the REIT’s strategy to reduce exposure to non-core markets and B or C-grade office assets.
The transaction will leave SERT with four Polish office assets and also reduce its exposure to Poland from the current 7% to 6.7%.
It also increases the REIT’s logistics and light industrial building exposure to 56.1% from 55.9%.
Arkonska Business Park is a two-building office complex with a total lettable area of 11,710 square metres.
It was valued at around €7.96 million as of 30 June 2025, and the sale price represents a slight discount to this valuation.
Proceeds from the sale will be used to reduce SERT’s revolving credit facility or for general working capital purposes.
The divestment is expected to be completed by the second half of 2025.
Mapletree Pan Asia Commercial Trust (SGX: N2IU)
Mapletree Pan Asia Commercial Trust, or MPACT, is a retail and commercial REIT with a portfolio of 17 properties across Singapore (4), Hong Kong (1), China (2), Japan (9), and South Korea (1).
The total value of these properties is S$16 billion as of 31 March 2025.
Last week, MPACT signed sale and purchase agreements with two unrelated third parties for the sale of two office buildings in Japan.
Under the agreements, ABAS Shin-Yokohama will be sold for JPY 3.33 billion while TS Ikebukuro Building will be divested for JPY 5.4 billion.
The combined divestment amounts to JPY 8.73 billion and is a 1.7% premium compared with the aggregate purchase price of the properties at JPY 8.58 billion.
These divestments are a part of the manager’s ongoing portfolio reconstitution efforts, with divestment proceeds used to reduce debt and strengthen MPACT’s balance sheet.
The divestments should be completed by the end of August and will leave MPACT with a portfolio of 15 commercial properties.
Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust, or FCT, is a retail REIT with a portfolio of nine suburban retail malls and an office building, all located in Singapore.
FCT recently completed the acquisition of Northpoint City South Wing, a yield-accretive asset which will add to its distribution per unit (DPU).
Owning 100% of the asset will also unlock value creation opportunities through asset enhancement initiatives (AEIs) and tenant mix strategies.
The retail REIT reported solid operating metrics for its third quarter of fiscal 2025 (3Q FY2025) ending 30 June 2025.
Its retail portfolio committed occupancy hit 99.9% while retail shopper traffic and tenant sales saw year-on-year increases of 2.1% and 4.4%, respectively.
Meanwhile, FCT’s Hougang Mall AEI has commenced and is targeted to be completed by September 2026.
The mall has achieved around 74% leasing pre-commitment, with many new-to-mall concepts such as Chagee, Jollibee, Timezone, and Mixue.
ESR REIT (SGX: 9A4U)
ESR REIT is an industrial REIT with a portfolio of 70 properties across Singapore (50), Australia (18), and Japan (2).
The total assets under management stood at S$5.9 billion as of 30 June 2025.
Just last week, ESR REIT announced the successful completion of the AEI at 16 Tai Seng Street.
This AEI created an additional 2,793 square metres of high-specification industrial space.
The property will achieve an occupancy rate of 40% post-AEI, and leasing activities should lift this to around 47% by 3Q 2025, thereby contributing positively to the REIT’s rental income stream.
Elsewhere, ESR REIT also delivered a sturdy first half of 2025 (1H 2025) performance.
Gross revenue jumped 23.2% year on year to S$222.9 million while net property income climbed 30.1% year on year to S$166.3 million.
Total DPU inched up 0.2% year on year to S$0.11239.
The REIT’s portfolio achieved a positive rental reversion of 9.7% for 1H 2025 with a healthy occupancy rate of 91.2%.
Looking ahead, ESR REIT expects to refinance its existing loans at lower rates while also enjoying interest savings from the issuance of cheaper perpetual securities.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
