Wednesday, June 15, 2016

Singapore REITs to ‘hold up in market downturn’: S&P Global Ratings

S&P Global Ratings have expressed confidence in the stability of Asia-Pacific REITs, including that of Singapore’s.

In a Monday report, analyst Craig W Parker says the region’s REITs rated by the research house have “solid business positions and moderate financial positions that are likely to hold up in a market downturn”.

Such rated REITs will maintain moderately conservative financial risk metrics that provide a large rating buffer to withstand debt-funded growth and economic shocks.

Still, S&P expects Singapore’s major commercial real-estate scene continues to experience some challenges in both the long and short term.

Despite some negative rental revisions, analyst Kah Ling Chan says key commercial landlords continue to register “healthy” occupancies of over 90% with weighted average lease expiries of about 20% per annum, which still provides some buffer to a downturn.

Noting “several large commercial asset disposals” which took place last month, Chan concludes that investor demand for this sector is still evident.

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