REIT managers heave a sigh of relief as MAS unveils benign new rules

The three feared proposals were not implemented.

REIT managers can now heave a sigh of relief after the Monetary Authority of Singapore (MAS) unveiled new measures to strengthen the REIT market.

The key changes include restricting the gearing limit to 45% of total assets, and increasing the development limit to 25% from 10% previously.

The MAS will also require managers to disclose the justification for each type of fees charged, as well as the justification for each type of fees charged.

Analysts noted that these changes will not be negative for REITs and will instead serve to strengthen the REIT market.

"None of three key potentially 'negative' proposals [were] implemented: periodic reappointment of managers, acquisition/divestment fees on cost recovery & interested party divestments. Overall no negative outcome for the sector," Maybank Kim Eng said in a report.

However, Maybank Kim Eng remained underweight on the sector due to oversupply amid weak demand.

Meanwhile, OCBC said that the outcome was generally within market expectations.

"In terms of long term impact, we believe these changes will promote financial prudence, allow greater business flexibility and enhance investor confidence in the sector," OCBC said.

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