Bangkok--11 Feb--Moody's Investors
Moody's Investors Service says in a new report that Singaporean CMBS transactions are enjoying strong cash flow from their underlying properties. Moody's additionally sees no rating implications on any of the outstanding Singaporean CMBS transactions, based on the performance of the underlying properties.
According to the quarterly report, entitled, "Singaporean CMBS 4Q2009 Performance Review", most transactions enjoy at least 3 times actual debt service coverage ratio, and appraisers' loan-to-value ratios are in the 16-32% range.
Two transactions have to be refinanced in 2010. With the economy gradually improving, Moody's expects that they will be able to obtain the necessary funding by their expected maturity dates.
"There is an oversupply of office space in the market and both rental and vacancy rates have deteriorated. However, for securitized transactions, rents have been stable so far and are higher than Moody's stabilized assumptions. Yet, vacancy rates have risen because of tenants moving out," says Jerome Cheng, a Moody's VP/Senior Credit Officer and co-author of the report.
"In terms of net cash flow, the most recent performances show that the deterioration in vacancy rates is more than offset by the better than expected rental rates," adds Cheng.
"There is also an abundant supply of retail space in the market, with two integrated resorts scheduled to open in early 2010. But take up for retail space in the market has been encouraging thus far. Suburban mall rental and occupancy rates are also very firm," says Marie Lam, a Moody's VP/Senior Credit Officer and co-author of the report.
Meanwhile, securitized industrial building rental and vacancy rates are very close to Moody's stabilized assumptions. Emerald Assets Limited , the only transaction with industrial buildings, is enjoying strong debt-service-coverage ratio.
Moody's is also reviewing the liquidity sufficiency of the outstanding CMBS transactions to ensure investors get paid on a timely basis in case of any cash flow disruption. A request for comment was published on 16 November 2009, and the rating agency will finalize the review process by first quarter 2010.
The report, which is part of Moody's efforts to provide more information and transparency to the Singapore CMBS market, is now available at www.moodys.com .