Why S-REITs are switching to medium-term note for financing

It's an alternative source of debt.

According to OSK, S-REITS have become less reliant on traditional senior loans secured against specific assets, and are taking to using MediumTerm Note (MTN) instead. In the past five years, there has been a significant hike in MTN issuances.

Here's more:

To date, approximately 50% of the REITs listed on Singapore Exchange have MTN facilities in place; they include CapitaMall Trust, Ascendas Reit, Frasers Centrepoint Trust and Cambridge Industrial Trust. MTNs are increasingly popular partly because they can be offered under varying structures, such as multi-currency, maturity.

Additionally, MTNs are an alternative source of debt that managers have at their disposal, and a disciplined approach to growing Reits' asset base.

On its outlook, Bastian van Halder, the associate director of JLL's corporate finance team, said: "The popularity of MTNs as an alternative source of finance for S-Reits would probably continue in the medium term, given their current strategy to increase assets under management while adopting a more flexible debt management strategy.

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