THE volatility in both property values and rentals has dealt a heavy blow to Singapore real estate investment trusts (S-Reits) in the past year but don't write them off just yet as analysts believe there are some gems that are worth a closer look.

CapitaMall Trust, Ascendas Reit (A-REIT), Frasers Centrepoint Trust and CapitaCommercial Trust are among those highlighted as "strongest" by the international credit ratings agency Standard & Poor's (S&P) in its latest report issued on Friday. The report said these Reits would be the "least likely to suffer from real estate and external shocks".

S&P pointed out three key factors that will set apart the stronger S-Reits from the pack: The cash-flow resilience of their underlying property portfolio, strong management of their operations and capital, and the strength of their sponsor or key shareholder.

"Some S-Reits are managing these factors better than the others," said S&P's credit analyst Allan Redimerio.

In the year to date, six S-Reits have embarked on rights issues to raise a total of about $3 billion to provide a capital cushion amid tough times.

The outlook for S-Reits has improved because refinancing risks have abated on improving credit markets, said Deutsche Bank in a recent note.

The Germany-based bank added that the "pace of deterioration in office rents has moderated, while leasing deals and tenant inquiries have picked up".

Daiwa Institute of Research analyst David Lum said that not all Reits were undervalued as the prices of these counters had risen such that they were no longer trading at big discounts.

But "investors would have to be very selective and look at underlying prospects for rents over the next three years. Rents for industrial and office space are still trending downwards," said Mr Lum.

Credit Lyonnais Securities Asia analyst Yew Kiang Wong has a "buy" call on A-REIT, based on its "long lease expiry profile, diversified portfolio, strong management execution and relatively better demand supply dynamics seen in the industrial sector".

"Business is progressing in line with our expectation and development projects are on track," said Mr Wong.

S-Reits had lost their shine amid the global credit crunch over the past 12 months, hammered by declining rents, falling occupancy rates, poor cash flows, weakening capital values and concerns over leverage and refinancing risks.

In its report, S&P assessed the relative credit strengths of 15 of the 21 S-REITs listed on the Singapore Exchange. The other six were excluded because they did not have any Singapore-based property exposure in their asset portfolios.

Those S&P said remained vulnerable to external shocks include CDL Hospitality Trust, Parkway Life Reit, Frasers Commercial Trust, First Reit and MacarthurCook Industrial Reit.

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