Fitch: REITs in Southeast Asia and Australia Will Maintain Resilience in Performance

(1) Fitch Ratings stated that despite uncertainties in global trade, the performance of Southeast Asian and Australian Real Estate Investment Trust (REIT) issuers should remain resilient, mainly due to asset quality and contractual income. Most rated issuers benefit from longer weighted average lease expiry periods, balanced expiry timetables, and leases that include cost pass-throughs, rental escalations, or inflation indexing, all of which help improve cash flow visibility.(2) The rising penetration of e-commerce and ongoing development of advanced manufacturing continue to support occupancy rates and rental recovery for premium logistics and high-spec industrial assets (although growth has slowed from previous highs). In contrast, suburban offices and business parks across most markets maintain high vacancy rates and will continue to face pressure. Some rating agencies have already disposed of related assets, easing the drag.(3) Issuers are expected to continue portfolio refreshes, led by regional asset management platforms, to unlock value and boost rental yields by divesting old assets, shifting to greener assets, and implementing value-add initiatives. Therefore, rated issuers are not expected to see significant deleveraging in the short term.