Five of the S-REITs under our coverage reported results last week. Three of the five results were above our expectations. Some of the REITs are still enjoying positive rental reversions, albeit at a lower rate than previously achieved. There have been further slippages in occupancy but many managers have countered that they were still better than the market average.

Guidance ranged from cautiously optimistic to just cautious. Generally, the managers agree that the external environment seems to be showing signs of stabilizing. But there is still variance in terms of manager expectations of the impact on 2H CY09 earnings. We note that the tone seems to be differentiated by sector ? for instance, Ascott Residence Trust ? which tends to be feel the first impact of macro directional changes ? seems to be (relatively) the most optimistic about 2H09 performance. Mapletree Logistics Trust, on the other hand, was far more cautious saying that despite some stabilization in the economic environment, in 2H09 "the environment remains challenging and occupancy and rental rates may be under pressure".

We like CCT and ART. We upgraded Ascott Residence Trust to a BUY last week and we are maintaining our BUYcall on CapitaCommercial Trust as well. Generally, we are seeing signs that the macro picture is bottoming out while the credit markets also seem to be unclogging. For Frasers Centrepoint Trust and Mapletree Logistics Trust, we feel their future DPU growth path is still a question mark ? pricing and financing is the big unknown for acquisitions.

Earnings adjusted upwards. We increased our FY09F & FY10F distributable income estimates for four out of the five S-REITs (namely CapitaCommercial Trust, Ascott Residence Trust, Mapletree Logistics Trust, and Frasers Centrepoint Trust). We still expect negative rental reversions for most REITs. In terms of valuation, we have also made some adjustments to the discount applied to our RNAV or SOTP value for the REIT as well as the discount and cap rates used.