Published October 20, 2008

Earnings spotlight on Reits, Keppel

Reit results should give impact of financial crisis on property sector

By WINSTON CHAI

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INVESTORS will be presented with a barometer for assessing the impact of the financial crisis on the property sector with five Reits turning in their quarterly report cards this week.

Safe Haven: Raffles City is jointly owned by CapitaCommercial Trust and CapitaMall Trust. Analysts say that Reits have an advantage over property developers as they are still expected to derive stable, visible and recurring income

Real estate investment trusts, or Reits, make up nearly one-third of the 16 companies that are set to release their results over the coming days as third quarter reporting season kicks into high gear.

Office trust K-Reit Asia will be the flag bearer for the sector with its results due out later today, followed by CapitaMall Trust tomorrow. Ascott Residence Trust and Mapletree Logistics Trust will release their earnings on Wednesday, with CapitaCommercial Trust rounding up the segment on Thursday.

A year ago, Reits were shunned by analysts due to concerns over their ability to refinance debt amid the credit crunch. In the last few weeks however, they have regained the lost favour with market watchers pointing to their falling prices and rising yields as the key selling point.

Against growing economic uncertainty, analysts say that Reits have an advantage over property developers as they are still expected to derive stable, visible and recurring income.

However, falling rentals, will take some shine off the sector. Meanwhile, debt refinancing remains a key issue with nearly $4 billion worth of Singapore Reit debt expiring next year.

In other sectors, Keppel Telecommunications and Transportation, the victim of a recent sell-down, is slated to report its Q3 results tomorrow.

The company's performance will likely be impacted by its main asset MobileOne, which turned in a 21 per cent drop in third-quarter profits last Friday.

Keppel Corp's China unit Evergro Properties will announce its Q3 results today, while the group's local developer arm - Keppel Land - will follow suit on on Wednesday. For Keppel Land, the softening local property sector, as well as its exposure to the troubled Vietnam economy, are expected to be two major bug bears.

Marine giant Keppel Corp, which derives nearly half of its profits through rig building, will report its Q3 results on Thursday. Once considered invulnerable due to its fat order book, its share price tanked last week due to indiscriminate selling, while plummeting oil prices is another lingering concern.

Other companies that are set to release their Q3 results this week include Singapore Petroleum Company, First Ship Lease Trust, technology firm Aztech Systems and beleaguered healthcare equipment maker OSIM International.