Singapore REITs have always been popular among local investors due to their low cost and reliable income.
REITs are expected to benefit from easing interest rates with lower financing costs and increased property valuations, which should lead to potentially higher distributions.
We compare two well-known retail REITs, CapitaLand Integrated Commercial Trust (SGX: C38U), or CICT, and Frasers Centrepoint Trust (SGX: J69U), or FCT.- for investors to consider for their portfolios.
Business Model and Portfolio Focus
First, let’s examine the portfolio focus of each REIT.
CICT stands out with its diversified mix of retail and office assets, alongside integrated developments: think of integrated developments (IDs) as large projects combining multiple uses (such as commercial, retail, and residential) in one space.
As at 31 December 2025, CICT’s portfolio of assets include 40% offices, 25% IDs, and 35% retail malls, based on the total portfolio value of S$27 billion.
Most of CICT’s assets are concentrated in Singapore (95%), with Germany and Australia making up the other 5% in geographical exposure.
On the other hand, FCT’s main focus revolves around suburban retail malls that serve daily consumer essentials, think: Hougang Mall, Causeway Point, and Tiong Bahru Plaza.
As at 30 September 2025, FCT has a portfolio of assets mainly comprising retail malls (97.3% of portfolio valuation), with office making up the other 2.7% of the portfolio.
FCT has a pure Singapore exposure for its properties, last valued at approximately S$6.4 billion.
Income Stability and Distribution Track Record
Looking at income stability, CICT benefits from its diversified income streams across retail, office, and its integrated development assets.
FCT’s suburban malls tend to deliver steady, defensive cash flows due to the essential services provided by its tenants (54% of tenants as of 30 September 2025).
Both names have solid distribution history.
CICT has paid an annual distribution since 2002, and its distribution per unit (DPU) has seen positive growth every year from 2020 (post-pandemic) to 2024.
Currently, CICT’s full year 2024 DPU stands at S$0.1088.
FCT, likewise, has paid a constant annual distribution since 2006.
However, unlike the office operator, this retail operator’s distributions have been mostly flat since 2021, with full-year 2025 DPU at S$0.1211.
Nonetheless, both REITs have maintained a constant annual dividend, highlighting the resilience of both businesses, being able to weather different economic cycles.
The resilience of CICT comes from its diversified exposure to different assets, while FCT’s stands steady from the essential spending nature offered by its malls.
Growth Drivers and Rental Upside
The office operator is looking at potential asset enhancement and redevelopment, with potential capital recycling initiatives to further strengthen the quality of its portfolio.
Alongside organic portfolio management, such as raising rents and maintaining higher occupancy, CICT is well-positioned for further growth.
As a point of reference, CICT managed strong rental reversions across its portfolio for 2025.
Meanwhile, FCT relied on steady rental reversions, aided by a favourable demand-supply dynamic and organic mall improvements for growth.
The REIT will also look for potential accretive acquisitions (such as its full acquisition of Northpoint City South Wing) to grow its distributable income.
For the full-year ending 30 September 2025 (FY25), FCT put up a decent rental reversion of +7.8%.
Balance Sheet Strength and Interest Rate Sensitivity
Turning to the balance sheet, both REITs have similar gearing ratios: CICT with an aggregate leverage ratio of 39.2% compared to FCT’s 39.6%.
Interest coverage tells a similar story, with FCT boasting a ratio of 3.46 times, while CICT has a ratio of 3.5 times.
In terms of debt profile, FCT has an average debt maturity of 3.16 years, with an average cost of borrowing of 3.5%.
With S$421.3 million due in FY2026, FCT could benefit from refinancing at lower rates, while the majority of its remaining debt matures between FY2029 and FY2030.
CICT has a slightly longer debt maturity of 3.9 years, with an average cost of debt of 3.3%.
Similarly, CICT can benefit from refinancing at lower rates, given that most of its debt matures between 2027 and 2030.
Yield Versus Quality Trade-Off
Given its portfolio of retail malls offering essential services, FCT represents a more defensive income play.
Currently, the REIT offers a trailing distribution yield of 5.3%.
Conversely, CICT stands out with its diversified portfolio and larger scale.
Given these factors, the REIT trades at a lower trailing distribution yield of 4.6%.
A higher distribution yield does not automatically mean better
While FCT’s higher yield may appear more attractive, it’s important to note that a yield premium often reflects the market’s assessment of higher specific risk compared to lower-yielding, larger-scale peers like CICT.
Get Smart: Compare Purpose, Not Just Price
Both CICT and FCT are quality REITs with distinct strengths.
CICT is better suited for investors seeking scale, diversified exposure, backed by long-term stable performances across business cycles.
Conversely, FCT is appropriate for those seeking more defensive and predictable income from essential services.
Ultimately, the choice depends on your specific income goals and how they align with each REIT’s characteristics.
Once you decide what you value most, it becomes easier to settle on a name.
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Disclosure: Wilson.H does not own shares in any of the companies mentioned.
