- The S-REITs Index fell 1.9% in February 2026, reversing the 0.7% gain in January 2026. Stoneweg Europe Stapled Trust was the top performer for the month, rising 6.9% on strong FY25 results. Prime US REIT was the worst performer, falling 12.9% after rising 14.2% the month before, as investors weighed a slower-than-expected recovery in portfolio occupancy.
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- Despite inflation concerns from heightened geopolitical tensions in the Middle East and expectations that the Fed will maintain higher-for-longer rates, we see potential for stronger DPU growth in FY26 from interest cost savings as benchmark SORA rates continue to decline. Valuations remain undemanding, with the sector trading at a forward dividend yield spread of ~3.8% (mean) and a P/NAV of 0.97x (-0.4 standard deviation).
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- We reiterate our OVERWEIGHT recommendation on S-REITs, as their stable performance and defensive positioning reaffirm their safe-haven status for global investors amid market volatility and uncertainty from heightened geopolitical tensions. Within sub-sectors, we prefer retail, where rental reversions are expected to remain strong in the high single-digits in 2026.
Sector round-up
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