REITs have been constrained from growing effectively in the past several years because of higher interest rates.
Such high rates have set a higher hurdle rate for acquisitions, making it tough for REITs to conduct yield-accretive ones.
However, REITs can still employ a variety of methods to increase their rental income organically.
One great method uses asset enhancement initiatives, or AEIs, to improve or spruce up assets and make them more attractive to tenants.
These AEIs can also result in positive rental reversions as tenant demand increases.
Here are four Singapore REITs that are using AEIs to grow their distributions.
Mapletree Pan Asia Commercial Trust (SGX: N2IU)
Mapletree Pan Asia Commercial Trust, or MPACT, has a portfolio of 17 commercial properties across four countries in Asia – Singapore (4), Hong Kong and China (3), Japan (9), and South Korea (1).
These properties have a total lettable area of 10.5 million square feet and are valued at S$16 billion.
MPACT is carrying out an AEI on its VivoCity retail asset.
Phase I works have almost been completed and involve increasing the number of food kiosks from 21 to 24.
This phase is slated for completion by the first quarter of fiscal 2026 (1Q FY2026) ending 30 June 2025.
The second phase will increase the retail net lettable area (NLA) by 14,000 square feet through the conversion of carpark and space configuration.
This phase is progressing on schedule and will see a blend of new and returning tenants to help enhance VivoCity’s offerings.
New brands include Mister Donut and Paris Baguette, while returning brands include United Overseas Bank (SGX: U11), BreadTalk, and Burger King.
The REIT estimates that it can achieve a return on investment (ROI) of more than 10% based on a capital expenditure (capex) of around S$43 million.
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.
The retail portfolio has around 2.7 million square feet of net lettable area and is valued at around S$7.1 billion.
FCT just completed its Tampines 1 Mall AEI back in August 2024, achieving an ROI of more than 8% and creating more than 9,000 square feet of NLA.
Next, the retail REIT is undertaking an AEI for Hougang Mall with a phased AEI that commenced in April 2025.
The purpose of the AEI is to expand the food and beverage (F&B) and retail options at Basement 1, Levels 1 and 3, and also to introduce all-day dining in high traffic areas.
Works have begun for both Basement and Level 1 and FCT has secured 64% leasing pre-commitment (based on NLA) with new-to-mall concepts to be introduced.
Some examples are Chagee (NASDAQ: CHA) and Skechers (NYSE: SKX).
The REIT manager is targeting an ROI of ~7% on capex of S$51 million, and works are slated to be completed by the third quarter of 2026 (3Q 2026).
CapitaLand Integrated Commercial Trust (SGX: C38U)
CapitaLand Integrated Commercial Trust, or CICT, is a retail and commercial REIT with a portfolio of 21 properties in Singapore, two in Germany, and three in Australia.
These properties are worth around S$26 billion as of 31 December 2024.
CICT is enjoying progressive contributions from the completion of IMM Building’s AEI.
For this AEI, Phases 1 and 2 were completed in 4Q 2024 while Phase 3 will be completed by 3Q 2025.
Gallileo in Germany is also undergoing an AEI with progressive handover beginning in the second half of this year.
CICT expects more meaningful contribution from this asset to come through in 2026.
Meanwhile, the retail and commercial REIT is planning for an AEI for Tampines Mall to be carried out in 4Q 2025.
AIMS APAC REIT (SGX: O5RU)
AIMS APAC REIT, or AAREIT, is an industrial REIT with a portfolio of 28 properties, of which 25 are in Singapore and the remaining three are in Australia.
The portfolio has around 777,000 square metres of lettable area and is valued at S$2.1 billion as of 31 December 2024.
The industrial REIT boasts a long history of successful AEIs since 2014.
AAREIT is progressing on two AEIs at 7 Clementi Loop and 15 Tai Seng Drive.
For 7 Clementi Loop, the REIT is upgrading the warehouse while for 15 Tai Seng Drive, it is repositioning the building to attract higher value and hi-tech tenants.
These AEIs will cost around S$32 million and the projected net property income (NPI) yield post-AEI should exceed 7%.
Over at NorthTech at Woodlands Industrial Park, AAREIT is repositioning this property into a modern and energy-efficient hi-tech facility.
This AEI will cost around S$13 million and enable the asset to enjoy a post-AEI NPI yield of 8.4%.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
