S-REITs can cushion external shocks, says S&P

Ratings agency Standard & Poor’s said Singapore Real Estate Investment Trusts (S-REITs) can cushion against external shocks in the event the economic downturn is prolonged.

In a report, S&P said three factors will offer S-REITs some buffer – cash flow resilience of the underlying properties, strong management of operations and strength of the S-REITs’ sponsor or key shareholder.

S&P also assessed the relative credit strengths of 15 of the 21 S-REITs listed on the Singapore Stock Exchange.

CapitaMall Trust, Ascendas REIT, Frasers Centrepoint Trust, and CapitaCommercial Trust have emerged as its top picks. They were singled out for managing their finances better than others.

At the other end, S&P found CDL Hospitality Trust, Parkway Life REIT, Frasers Commercial Trust, First REIT, and MacarthurCook Industrial REIT to be the most vulnerable to external shocks.

Six S-REITs were excluded from S&P’s assessment as they did not have any Singapore-based property exposure in their asset portfolios.

Source : Channel NewsAsia – 3 Jul 2009

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