THE Singapore government's move to extend most of the expiring tax incentives and concessions for real estate investment trusts (Reits) until March 2020 should help the city-state stay ahead of other regional Reit jurisdictions, DBS Group Research said on Tuesday.
"The decision offers relief to investors and Reit managers. This will enhance Singapore's reputation as one of Asia's most dynamic Reit hub," DBS analysts said in their industry focus piece.
"These incentives will continue to promote further growth and diversity of the sector, as (i) existing listed Reits continue to derive tax-efficient returns through overseas acquisitions, and (ii) issuers will look to Singapore as one of the leading exchanges to list new Reits with regional assets."
However, the analysts noted that the stamp-duty remission on Singapore properties will expire on March 31, 2015.
"Looking ahead, while internal return hurdles might be higher for acquisitions, there should not be a big change in the Reits' acquisition strategies. However, the pace of acquisitions could taper down as returns moderate. We see the largest impact on the industrial space, smaller bite-size acquisitions and heightened M&A activity," the analysts said.
The analysts said they would look for further clarity from the recent MAS (Monetary Authority of Singapore) consultation paper that is intended to address corporate governance and perceived agency issue between Reit managers and unitholders.
Their top picks in the Reit space are Mapletree Greater China Commercial Trust, Ascendas Reit, CDL Hospitality Trust and Frasers Commercial Trust.