Singapore has proposed changes to the regulatory framework for real estate investment trusts (REITs), including relaxing limitations on borrowing by these property investment vehicles.
Other proposed changes include tougher disclosure standards and allowing REITs to be more involved in development projects, the Monetary Authority of Singapore (MAS) said in a statement earlier this month.
“The proposals will enhance the transparency and corporate governance of the REIT market and improve its attractiveness to issuers and investors,” according to the paper.
As of 30 September, there were 33 REITs listed in Singapore, with a total market capitalisation of SGD61bn (€38bn).
Under the proposed changes, the development limit of a REIT will be increased from 10% to 25% of its deposited property.
In addition, the leverage limit imposed on REITs will be increased from 35% to 45% of the REIT’s total assets, while the option for REITs with credit ratings to leverage up to 60% will be removed.
“These proposed changes will provide REITs with greater operational flexibility to rejuvenate the REITs’ maturing portfolio of assets,” the MAS said.
REIT managers and directors will also have the statutory duty to prioritise the interests of REIT investors over those of the REIT manager and its shareholders, in the event of a conflict of interest.
“The board of a REIT manager will have a stronger independent element, to enhance its objectivity when considering the interests of REIT investors,” according to the statement.
The MAS has proposed more comprehensive disclosure to investors in annual reports of the amount of income support payments received.
It has also called for more information on the lease expiry profile and refinancing needs of REITs, as well as more detail on remuneration policy for directors and executive officers and their actual remuneration.
APREA said it was “actively engaged in the consultation”, holding discussions with the MAS last week.
A meeting of members, in league with the Singapore Institute of Directors, takes place on Friday.
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