S-Reits' refinancing flexibility offsets high leverage risks

SINGAPORE-LISTED real estate investment trusts (S-Reits) have good refinancing flexibility which offsets the risks associated with the sector's high leverage, Fitch Ratings said in its report released yesterday.

S-Reits have been able to sustain their high leverages - or borrowings as a ratio of assets - chiefly due to low market interest rates and rising asset values in a largely bank-funded market.

Most of the S-Reits' loans make up less than 40 per cent of the value of their properties, well below the regulatory limit of 60 per cent for rated Reits.