Article about S-REITS

HONG KONG - Fitch Ratings says in a new report that Singapore Reits (S-Reits) have seen off the global financial crisis of 2008-2009, and have moved to restructure and position themselves to weather future credit and liquidity crises. However, their lack of committed liquidity remains a risk.

'S-Reits are better placed to weather future crises than they were previously, although they remain vulnerable due to a lack of committed facilities and low liquidity coverage, and are reliant on the Singapore banking sector remaining largely unaffected by any global economic fallout,' says Helen Wong, Director in Fitch's Structured Finance team.

'However, Fitch believes that S-Reits' low gearing and strong sponsors would help to mitigate some liquidity risk.'

S-Reits survived the global crisis, largely due to their distance from the epicenter of the crisis, availability of funding sources and strong sponsors. The report explains a few lessons S-reits have learnt from the global crisis, making them better placed to weather future crises. It notes that maintaining a low gearing has provided S-reits with financial flexibility in raising additional debt and allowed them to withstand falling asset prices.

Further, S-Reits' increasing focus on keeping a portion of assets unencumbered will allow them access to secured funding should unsecured funding become more expensive or even closed. In addition, diversifying banking relationships has meant that S-Reits are not dependent on the willingness or ability of a particular lender for capital. Some S-Reits have also been proactive in lease renewal and managing their lease maturity profile.

In particular, Fitch sees the retail and healthcare sectors of S-Reits as resilient and best- placed to weather further volatility should another global crisis occur. The industrial sector would be more vulnerable, while the office and hotel sectors would be most affected due to their dependency on the global economy. -- REUTERS

Source: Business Times Breaking News

Low gearing, Long maturity profile, good debt management, & more then 8% dividend yield are my criterias to select a good S-REITS. Of course it is tough to meet all criterias; hence a clear mind with a well-defined balance points are the key factors for a right investment selection.