RPT-Fitch: S'pore REITs Highly Leveraged; Face Refinancing Risk
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Sept 30 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings says in its new reports that while the operating metrics of Singapore-incorporated healthcare, hospitality and industrial REITs are stable now, the funds flow from operation (FFO)-adjusted net leverage of these REITs is high and they are exposed to refinancing risk.
There is considerable variation in the business risk the REITs are exposed to, with the healthcare REITs having a defensive business profile and the business of the hospitality REITs being the most cyclical of the three categories. Both industrial and hospitality REITs also face the risk of rental income being adversely affected by the additional stock of properties entering in the market till end-2015.
Fitch expects REITs with large and granular investment property portfolios, FFO-adjusted net leverage below 6.5x, and master lease agreements that include a triple-net-lease clause that protects their net property income margin from increases in property operating expenses, property tax and property insurance to be relatively more insulated from business and financial risks.
The 'Healthcare REIT', 'Hospitality REIT' and 'Industrial REIT' dashboards are available at www.fitchratings.com.
Link to Fitch Ratings' Report: Singapore Industrial REIT Dashboard H213
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