Moody’s says outlook for S-REITs stable

Moody’s Investors Service says the outlook is stable for Singapore’s Real Estate Investment Trusts (REITs) sector in the year ahead.

Based on a report released on Monday, the ratings agency says a larger asset base and rent increases on existing properties are expected to fuel growth for the 13 REITs it rated.

It forecasts that the earnings before interest, taxes, depreciation and amortization (EBITDA) of the 13 S-REITs will grow by 4 per cent in 2014.

In the office segment, the tight supply of new office space in the core central business district is expected to improve occupancy rates.

In the retail segment, occupancy and rental rates are forecast to remain stable, despite the large upcoming suburban supply spread across different areas.

The strong take-up of upcoming business and science park space will keep occupancy and rentals broadly stable next year.

But in the warehouse segment, Moody’s says a spike in the supply of new warehouse space may pressure occupancy and rental rates.

Meanwhile, the staggered debt maturity profile in the sector indicates manageable refinancing risk over the next year.

Despite higher funding costs due to higher interest rates, Moody’s expects most S-REITs to be insulated, due to their high proportion of fixed-rate debt and low refinancing obligations.

Most S-REITs have also reduced their reliance on secured funding.

Source : Channel NewsAsia – 9 Dec 2013