Investing Updates : MAS on REITs Leverage Requirements

AI Summarization

Certainly! The Monetary Authority of Singapore (MAS) has recently proposed changes that could benefit Singapore-listed Real Estate Investment Trusts (S-Reits) nearing existing regulatory gearing limits. Here are the key points:

1. Aggregate Leverage Limit Increase: MAS aims to raise the aggregate leverage limit for S-Reits. This means they’ll have more flexibility in managing their leverage requirements. Most S-Reits have maintained aggregate leverage ratios under 45%, but the proposed changes will provide additional breathing room¹.

2. Interest Coverage Ratio (ICR) Adjustment: Under the proposed changes, all S-Reits will be subject to a lower minimum ICR of 1.5 times (down from the previous requirement) and a higher gearing ratio of 50%¹.

These adjustments are designed to foster prudent borrowing by S-Reits. Notable beneficiaries may include Suntec Reit, Mapletree Pan Asia Commercial Trust, Lendlease Global Commercial Reit, and Keppel Reit¹. If you’re interested in real estate investment, keeping an eye on these developments could be valuable! 🏢📈¹²

My Thoughts

• Interesting development from MAS.
• With upcoming FED rate cut, did MAS needed to "help" REITs sector? Perhaps to push attractiveness and more investments on what already works?
• Imo, in absence of a black swan, the bottom is probably in for REITS. Especially the quality ones.