Proposed MAS changes to REIT regulations include higher borrowing limits

The Monetary Authority of Singapore (MAS) has proposed changes to the regulatory framework for real estate investment trusts (REITs), including a relaxation of borrowing limits for these property investment vehicles.

Other proposed changes include tougher disclosure standards and letting REITs get more involved in development projects, MAS said in a consultation paper released on Thursday (Oct 9).

“The proposals will enhance the transparency and corporate governance of the REIT market and improve its attractiveness to issuers and investors,” MAS said.

As of Sep 30, there were 33 Singapore REITs with total market capitalisation of S$61 billion.

MAS proposed increasing the leverage, or borrowing, limit imposed on unrated REITs to 45 per cent of total assets from the current 35 per cent. For REITs with credit rating, the present 60 per cent cap on leverage will be removed.

Meanwhile, the development limit for a REIT will be raised to 25 per cent of its deposited property, up from 10 per cent. These proposed changes will provide the REIT with greater operational flexibility to rejuvenate the REIT’s maturing portfolio of assets, MAS said.

In terms of disclosure requirements, MAS proposed REITs be made to provide information such as the amount of income support payments received as well as the remuneration policy for directors and executive officers.

Those wishing to comment on MAS’s consultation paper on REITs should do so by Nov 10.

Source : Channel NewsAsia – 9 Oct 2014

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