Bangkok--18 Aug--Moody's Investors
Moody's Investors Service says in a new quarterly report that Singaporean CMBS are showing strong cash flows from their underlying properties and accordingly sees no rating implications on outstanding transactions based on the performance of their portfolio.
The report -- which covers 2Q2010 and is entitled, "Singaporean CMBS 2Q2010 Performance Review" -- says the transactions continued to enjoy at least three times actual debt service coverage ratios ("DSCR"), while appraisers' loan-to-value ratios were in the 16-32% range.
This performance has been unchanged for the last year.
Singapore's economy grew strongly in 2Q2010 with GDP up 18.8% from a year ago. This is record-breaking growth for Singapore, whose recovery has outpaced the rest of the world.
"The strong economic performance has improved market sentiment. The vacancy rate of those securitized office buildings which were previously over 10% improved to below 10% in June 2010. Even though the general market's office rental rates and occupancy rates are still soft, such a situation largely reflects abundant supply," says Marie Lam, a Moody's VP/Senior Credit Officer and co-author of the report.
"In the retail sector, supply of prime retail space is supported by good demand. Although pressure on city fringe malls should remain, the suburban shopping malls in the securitized pools show stable rental rates and low vacancy rates," says Jerome Cheng, a Moody's VP/Senior Credit Officer and co-author of the report.
Meanwhile, securitized industrial buildings' rental rates in 2Q2010 were all within Moody's stabilized assumptions. However, vacancy rates in certain buildings have increased in recent few months.
In addition, the Autron Building, a light industrial building in Ruby Assets Pte. Ltd., was repossessed by the property manager because its tenant had been in arrears since 4Q2009. About 40% of the repossessed space has since been re-let. In view of the small contribution of this building to Ruby's portfolio (2.4% of gross rental in May 2010) and an actual DSCR of almost 14 times in the transaction, there should be no negative impact on the rating of the notes.
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.
In addition, Moody's publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at www.moodys.com/SFQuickCheck.