Financing costs are the Achilles’ heel for Real Estate Investment Trusts (REITs).
Then again, when interest rates decline, REITs with strong fundamentals could rally due to lower interest costs.
Today, we compare CapitaLand Integrated Commercial Trust or CICT (SGX: C38U) and Frasers Logistics & Commercial Trust or FLCT (SGX: BUOU), two juggernaut REITs with different asset profiles.
CICT (SGX: C38U) — Singapore’s Commercial Powerhouse
In its recent third-quarter update (3Q2025), CICT delivered a solid report that highlights why it’s a resilient blue-chip REIT.
Its occupancy rate stands strong at 97.2%, while achieving solid year-to-date (YTD) rental reversions of 7.8% and 6.5% for its retail and office properties, respectively.
As of 30 September 2025, CICT holds a diversified portfolio with its retail, office, and integrated development assets contributing 36.9%, 33.4%, and 29.8% respectively, of its net property income.
The mall operator’s latest distribution per unit (DPU) came in at S$0.0562 per share for 1H2025.
This represents an annual increase of 3.5% compared to its 1H2024’s distribution of S$0.0543 per share.
CICT remains well-capitalised with an aggregate leverage level of 39.2%.
The REIT is benefitting from lower rates with a lower average cost of debt of 3.3%.
With 74% of total borrowings on fixed rates, CICT could refinance at lower rates, which could contribute to higher earnings and DPU.
The mall operator has a well-spread-out debt profile extending into 2035, with the majority of borrowings coming due from 2027 to 2030.
Do note that the maximum percentage of debt due in a year for CICT stands at 20% in 2027.
All in all, CICT is heavily exposed to Singapore’s prime retail and office properties.
Recent uptick in leasing and resilient shopper footfall is benefiting the REIT.
CICT’s short-term payout has been weighed by financing costs – something that can reverse in the near future.
We expect CICT will benefit from rate cuts, leading to increased net property income and higher property valuations.
FLCT (SGX: BUOU) — The Global Logistics & Commercial Player
FLCT reported a lower DPU for its financial year ended September 30, 2025 (FY2025).
DPU came in at S$0.0595 per share, which is lower by 12.5% compared to FY2024’s DPU of S$0.0680 per share.
The REIT’s occupancy rate remains robust at 95.1%.
Rental reversion remains positive at 5%.
The logistics operator reported a better aggregate leverage of 35.7%, with an average cost of debt of 3.1%.
With 70.4% of total borrowings at fixed rates, FLCT could benefit from refinancing at lower interest rates.
FLCT has a well-spread debt maturity extending to FY2031.
Do note that the REIT has 29% and 25% of total borrowings coming due in FY2028 and FY2029.
FLCT stands out with its strong exposure to logistics assets, with a long weighted average lease expiry (WALE) of 4.8 years.
The REIT also enjoys tenants all around the world, reducing geographical exposure.
As of 30 September 2025, logistics and industrial assets comprise 75.1% of FLCT’s assets, with the rest in commercial assets.
The logistics operator has 45.6% exposure to Australia, 41.9% exposure to Europe, and only 12.5% Singapore exposure.
As such, FLCT is highly exposed to foreign exchange (FX) fluctuations and the global macroeconomic situation.
Declining interest rates will allow the REIT to benefit from lower refinancing costs and higher valuations for its properties.
Head-to-Head Comparison
| REIT Name | CICT | FLCT |
| DPU Growth / Decline year-on-year | 3.5% | -12.5% |
| Portfolio Occupancy | 97.2% | 95.1% |
| Rental Reversion | 7.15% (average) | 5.0% |
| WALE | 3.2 years | 4.8 years |
| Tenant Mix | Mostly local | Mostly overseas |
Note: CICT’s rental reversion is an average of its retail & office properties YTD, while FLCT’s rental reversion is year-on-year.
Do note that CICT is a more local player with strong exposure to some of Singapore’s prime office and retail properties.
It benefits from higher footfall and the recovery in office space.
On the other hand, FLCT is more exposed to global locations.
With a focus on logistics, the REIT benefits from the secular growth trend in e-commerce as well as resilient supply chains.
Lower interest rates benefit CICT in terms of lower refinancing costs, while FLCT benefits from higher property valuations.
Sector Context
The broader REIT sector is expected to benefit from lower interest rates.
Get Smart: Which REIT Might Recover Faster?
Having said all that, will CICT or FLCT benefit more from lower interest rates?
Well, nuance is the key: CICT should improve with lower financing costs while benefitting from the local Singapore recovery.
FLCT is riding the structural growth tailwind of e-commerce, but it might suffer from global FX fluctuations and growth risks.
Both REITs are solid and should experience a general rerating to the upside due to lower rates.
Investors who prefer a local presence should consider CICT, while investors looking for global exposure should consider FLCT.
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Disclosure: Wilson H. does not own shares in any of the companies mentioned
