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Hurdles include rising interest rates and high market prices of assetsTHE outlook for Singapore-listed real estate investment trusts (Reits) this year does not appear bright, most analysts say.self storageThe rosy times enjoyed by the sector came to a screeching halt from the second half of last year.And the same worrying factors that led to that sharp change of sentiment still haunt the sector - most notably the United States Federal Reserve's tapering of its massive stimulus programme.So funding costs are nudging higher with rising interest rates and asset values are still moving higher, limiting opportunities for Reits to swoop on assets to beef up their portfolios. In turn, this could crimp payouts, which according to SGX's My Gateway, totalled some $2.84 billion last year.Add to the mix higher yield expectations from investors who are shunning Asian markets to embrace the recovery story in developed markets for gains and it is easy to appreciate analysts' sombre prognosis for the S-Reits.Other niggling factors are in the mix too.Singapore was one of the first centres to come up with a true-blue praise-worthy framework for Reit listings and for that, it has long enjoyed the status of the region's sweet Reit hub.It boasts of having the largest number of Reit listings in the region, if you take Japan out of the equation. But the Singapore Exchange, which currently has 25 Reits with a total market value of some $50 billion, could soon face more competition in wooing these listings."S-Reits have done well in previous years partly because there was a lack of Reit structure in regional markets. With the establishment of this framework in some countries, entities may choose to list in their home countries (instead)," said OCBC Investment Research analyst Kevin Tan.The Philippines and Thailand now have their own set of rules for Reits while India will soon join the fray.Some analysts still hope new Reits might list here this year, notably those wit迷利倉 offshore assets.But historically, investors appear to have embraced Reits with local assets better than they do those with assets abroad."The market (generally) favours local Reits as they are more familiar with the assets and need not be concerned with foreign exchange fluctuations and tax issues associated with overseas assets ... although the Reits enjoy tax transparency in Singapore," said OCBC's Mr Tan.Their trading patterns prove this preference. Reits with offshore assets, which include Saizen Reit, Fortune Reit and Mapletree Greater China Commercial Trust, generally trade at a discount to their book value compared with Reits with domestic assets which trade at parity.In fact, some Reits with local assets such as CapitaMall Trust, SPH Reit and Mapletree Commercial Trust even trade at a premium to book values.Even with the prevailing bearish view of this sector, there are some bright spots.Many Reits have pumped up their capital positions or refinanced their debt to take advantage of the low-interest rate environment while it lasts.Ascendas Reit, for one, plans to refinance term loans worth $395 million maturing in May this year, which would improve its interest rate hedging level.Starhill Global Reit, whose portfolio includes Wisma Atria and Ngee Ann City in Singapore and other assets in Malaysia and Australia, has also refinanced its debts which are now substantially hedged.But hurdles are mounting.Current high market prices of certain assets have made it tough for S-Reits to justify any proposed acquisition to up the ante on returns.No surprise then, that Mr Tan expects to see more asset enhancement initiatives this year to crank up yields."Reits are likely to continue to reposition their assets as acquisitions have turned costly."The incremental value from their past enhancement initiatives has not been fully unleashed yet and could materialise over the course of this year...it's a good thing," said Mr Tan.anitag@sph.com.sg迷你倉