Dear readers, in today’s investment climate—marked by lingering inflationary pressures, economic uncertainty, and a recent softening in Singapore’s risk-free rates—Real Estate Investment Trusts (REITs) have once again emerged as an attractive asset class for yield-hungry investors.
With the 6-month Singapore Treasury Bill cut-off yield falling below 1.8% recently and fixed deposit rates increasingly hovering around the 2% mark, many investors have started shifting their focus to high-quality Singapore-listed REITs that offer higher dividend yields, typically ranging between 4% and 7%.
However, picking the right REIT is not just about going for the highest yield. One critical but often underappreciated factor in REIT selection is gearing ratio—a key metric that can determine the long-term sustainability and stability of a REIT’s distribution to unitholders. In this article, we explore the top Singapore REITs with the lowest gearing ratios as of July 2025 and explain why this metric matters to both new and seasoned investors.
What Is a Gearing Ratio and Why Should Investors Care?
The gearing ratio, often referred to as the debt-to-asset ratio, measures a REIT’s financial leverage. It shows how much of the REIT’s assets are funded by debt rather than equity. The formula is simple:
Gearing Ratio = Total Borrowings / Total Assets
The Monetary Authority of Singapore (MAS) imposes a regulatory gearing cap of 50% on REITs, beyond which they are not allowed to borrow. Most REITs, however, operate well below this threshold to maintain financial flexibility and weather adverse market conditions.
Here’s why gearing ratio matters to investors:
- Resilience in Rising Interest Rate Environments
Low gearing implies lower debt levels and therefore, less sensitivity to interest rate increases. With SORA still relatively high compared to historical norms, highly leveraged REITs may face margin compression due to rising interest expenses.
- Greater Capacity for Future Acquisitions
REITs with low gearing have more room to take on additional debt for future growth through acquisitions, potentially leading to NAV growth and higher distributions.
- Stronger Balance Sheets = Higher Credit Ratings
Credit rating agencies reward REITs with conservative balance sheets. This often translates into more favourable borrowing rates and better terms from lenders.
- Buffer Against Asset Devaluation
During market downturns, asset values may fall. REITs with lower gearing are less likely to breach loan covenants tied to asset values, avoiding forced sales or dilutive equity raisings.
How Does Singapore Compare Globally?
Singapore REITs (S-REITs) are known for their strong regulatory framework, transparency, and conservative gearing practices compared to global peers. For example, US REITs are not subject to statutory gearing limits and often operate with higher leverage. The cap of 50% imposed by MAS offers investors a protective layer, but those REITs that maintain even lower gearing demonstrate exceptional discipline.
TOP SINGAPORE REITS WITH LOWEST GEARING RATIOS (as of July 2025)
Based on latest disclosures and data from SGX-listed REITs, here are the top ten Singapore REITs with the lowest gearing ratios, grouped by range.
1. Gearing Ratio: 25% to 30%
Sasseur REIT (SGX: CRPU)
- Gearing Ratio: ~27.8%
- Portfolio Focus: Outlet malls in China
- Distribution Yield: ~7.4%
- Why It Stands Out:
Despite its China exposure, Sasseur REIT has maintained a relatively low gearing while generating attractive yields. Its asset-light entrustment management agreement (EMA) structure allows it to manage risks and scale operations with discipline.
AIMS APAC REIT (SGX: O5RU)
- Gearing Ratio: ~29.5%
- Portfolio Focus: Industrial and business parks across Singapore and Australia
- Distribution Yield: ~7.2%
- Strengths:
Strong balance sheet has given AIMS APAC REIT headroom to pursue accretive acquisitions in Singapore’s resilient industrial sector. It recently secured high occupancy rates and has demonstrated prudent capital recycling.
2. Gearing Ratio: 31% to 35%
Keppel DC REIT (SGX: AJBU)
- Gearing Ratio: ~32.1%
- Portfolio Focus: Data centres across Asia-Pacific and Europe
- Distribution Yield: ~4.3%
- Investor Appeal:
Keppel DC REIT continues to be a favourite among institutional investors due to its exposure to digital infrastructure. Its low gearing allows room to expand its footprint in this growing asset class.
Far East Hospitality Trust (SGX: Q5T)
- Gearing Ratio: ~33.4%
- Portfolio Focus: Hotels and serviced residences in Singapore
- Distribution Yield: ~5.2%
- Commentary:
Benefiting from the strong post-COVID tourism recovery and low gearing, the trust has been able to weather interest rate headwinds without diluting unitholders.
Frasers Hospitality Trust (SGX: ACV)
- Gearing Ratio: ~34.9%
- Portfolio Focus: Global hospitality assets in Europe, Australia, and Asia
- Distribution Yield: ~5.0%
- Recent Highlights:
Frasers Hospitality Trust’s exposure to global tourism recovery has been complemented by disciplined capital management. Low gearing supports future refurbishments and revaluations.
3. Gearing Ratio: 36% to 38%
Frasers Logistics & Commercial Trust (SGX: BUOU)
- Gearing Ratio: ~36.4%
- Portfolio Focus: Logistics assets in Australia and Europe, and commercial properties in Singapore
- Distribution Yield: ~6.1%
- Why Investors Like It:
Stable income from long WALE (weighted average lease expiry) logistics assets supports consistent payouts. Low gearing gives it room to deepen exposure in high-demand logistics segments.
Parkway Life REIT (SGX: C2PU)
- Gearing Ratio: ~36.9%
- Portfolio Focus: Hospitals and healthcare assets in Singapore and Japan
- Distribution Yield: ~4.0%
- Investor Perspective:
One of the most defensive REITs, Parkway Life’s long master leases with built-in rental escalations offer stability. Its conservative gearing adds to its reputation as a “recession-proof” REIT.
Starhill Global REIT (SGX: P40U)
- Gearing Ratio: ~37.1%
- Portfolio Focus: Retail and office assets in Singapore, Malaysia, and Australia
- Distribution Yield: ~5.6%
- Investor Notes:
Starhill has seen steady performance post-COVID, with its Singapore retail assets providing a stable foundation. The low gearing gives management flexibility for value-enhancing asset upgrades.
IREIT Global (SGX: UD1U)
- Gearing Ratio: ~37.5%
- Portfolio Focus: Office assets in Germany and Spain
- Distribution Yield: ~6.8%
- Insights:
Despite Europe’s economic uncertainties, IREIT Global has maintained healthy tenant retention and prudent gearing. Its strong income visibility supports long-term distribution stability.
Mapletree Pan Asia Commercial Trust (SGX: N2IU)
- Gearing Ratio: ~37.8%
- Portfolio Focus: Integrated commercial assets across Singapore, Hong Kong, China, Japan, and South Korea
- Distribution Yield: ~5.4%
- What’s Special:
Following the merger between Mapletree Commercial Trust and Mapletree North Asia Commercial Trust, the combined entity has shown better diversification and cost synergies. Its relatively conservative gearing supports its pan-Asia growth ambitions.
Low Gearing vs High Yield: A Balancing Act
While low gearing is an indicator of financial prudence, investors must also weigh it against yield. Some high-yielding REITs may have moderately higher gearing due to aggressive acquisitions, but they also come with higher risk. As such, understanding the REIT’s asset quality, tenancy profile, interest coverage ratio, and cost of debt is equally important.
Example:
- A REIT with a 39% gearing and 7.5% yield might appear attractive but could be at risk of distribution cuts if refinancing costs rise.
- Conversely, a REIT with 32% gearing and a 5% yield may offer long-term stability and capital growth.
Final Thoughts: Is Low Gearing the Key to the Best REIT Investment?
Low gearing by itself is not a guarantee of superior performance, but it’s an important piece of the puzzle—especially in uncertain markets. Investors should view gearing in the context of the REIT’s overall strategy, asset class, and market exposure. Ultimately, the best REITs for your portfolio are those that align with your risk appetite, income needs, and investment horizon.
Should You Prioritise Gearing Over Yield?
It’s a classic trade-off. While low gearing provides safety, some high-yield REITs may carry higher debt to fund expansion. The question is: can they manage that debt?
Here’s how to balance your decision:
| Situation | Low Gearing REIT | High Yield REIT |
|---|---|---|
| Uncertain interest rates | ✅ Safe haven | ❌ Vulnerable to refinancing shocks |
| Looking for stable income | ✅ Predictable payouts | ⚠️ Possible payout cuts |
| Seeking short-term high income | ❌ Lower yield | ✅ Higher yield but more risk |
| Planning long-term accumulation | ✅ Room for growth | ⚠️ May face equity dilution |
Conclusion: Why Investors Should Keep an Eye on Gearing
As we move into the second half of 2025, macroeconomic risks persist, including global slowdown concerns, potential interest rate adjustments, and geopolitical instability. In such an environment, S-REITs with low gearing ratios are well-positioned to maintain steady distributions, withstand valuation shocks, and capitalize on new opportunities.
For Singaporean investors—especially retirees or income-focused individuals—these REITs represent strong candidates for core portfolio holdings. Whether you’re investing through CPFIS, SRS, or your cash account, low-gearing REITs offer a peace-of-mind buffer that can pay dividends in both bullish and bearish times.
Stay tuned as we continue to monitor which Singapore REITs not only maintain low gearing but also deliver sustainable growth, consistent payouts, and long-term value to unitholders.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please do your own due diligence or consult a licensed financial adviser before making any investment decisions.