Oil Above $100, Record Power Costs Test Singapore REITs

CapitaLand Integrated Commercial Trust (SGX: C38U) had 38.5% leverage and a 3.8x interest coverage ratio in the first quarter of 2026. Office and retail rents rose 6.1% and 4.4% respectively on positive reversions. Its Singapore portfolio electricity rates are locked through end-2026. Overseas rates are largely fixed to mid-2027 or 2028, containing the bill shock.

Parkway Life REIT (SGX: C2PU) reported an 8.6x interest coverage ratio and 33.4% gearing in the second half of 2025. Its rent review formula is linked to the consumer price index. The manager expects it to drive a 24.3% rent increase in 2026. The REIT's NNN lease structure passes property taxes and operating expenses directly to tenants, insulating returns from inflation.

The S-REIT sector is better positioned than during the 2022-2023 hiking cycle, when REITs refinanced ultra-low-rate debt into a far costlier environment. Loans taken at the peak of that cycle are now being refinanced at more sustainable rates. High-quality REITs with fixed or hedged debt face less immediate volatility.

AAREIT's annual escalations are already built into leases. CICT's energy hedges run through 2027. Parkway Life's CPI-linked formula means its rent rises alongside inflation, not after. These structures contain the risk of margin compression for the three REITs, even if oil stays elevated and the MAS keeps its inflation forecast elevated.