Revising Down FVEs Across Developers on Higher Credit Risk Amid Worsening Market Conditions

In parallel to another real estate credit risk driven sector correction beyond asset fundamentals, the Singapore REIT market suffered during the global financial crisis. During that period, the market's immediate concern was with the debt risks leading to a significant gap in share prices to fundamental values. This is as investors were focused on respective REIT debt expiry profiles instead, and unit prices trading at wide deviations from reasonable yield, capital values or rents that long-term fair value estimates should imply. Hence, even quality Singapore REITs with low risk of default were indiscriminately sold down with the sector-wide contagion and higher market risk premium.