SREITs – Moodys

Moody’s Sees Negative Outlook For Singapore REITs

The following is a press release from Moody’s Investors Service:

Singapore, May 22, 2008 — Moody’s Investors Service has a negative rating outlook for Singapore’s real estate investment trusts (S-REITs) over the next 12-18 months.

Despite overall sound fundamentals, negative market sentiment and tighter market liquidity have impaired the access of some issuers to the capital markets, Moody’s says in a new report.

The report is entitled “Singapore Real Estate Investment Trusts (S-REITs): Short-Term Refinancing Risks and Uncertain Capital Markets Weigh on Sector,” and is authored by Kathleen Lee, a Moody’s Vice President/Senior Analyst, and Kaven Tsang, an Assistant Vice President/Analyst.

“Materially tighter credit conditions are adversely affecting both the availability and price of debt at a time when a number of S-REITs face imminent refinancing needs,” says Lee, who is the lead author.

“At the same time, depressed unit prices of many trusts have reduced the attractiveness of equity funding and boosted leverage at some entities as they fund already committed acquisitions,” Lee adds.

As a result of these challenges, Moody’s in recent months has downgraded or put on review for downgrade three S-REITs and set outlooks for two others to negative.

“As we look ahead, difficult market conditions have increased the likelihood of event risk affecting credit profiles through merger or divestiture activity”, Lee says, “Better-off S-REITs may take advantage of the attractive valuations of those peers that face liquidity problems or trade at high discounts to net asset value.” She adds, “Likewise, some entities may reconsider their strategic profiles to realize greater value for their unit holders.”

Tsang says, “At the same time, the fundamentals of Singapore’s property market remain firm as high occupancy rates support yields and cash flows.” He adds, “Most S-REITs retain good quality assets that will allow them to benefit from this trend.”

In addition, the report notes that Singapore’s economy is slowing but still solid and an easing in benchmark interest rates following the U.S. lead and the continued strong inflow of foreign funds should provide ongoing support to the sector’s fundamentals.

The report is available at www.moodys.com.