Proposed Reit reforms may turn out to be a win-win for all parties

Smaller fees for sponsors seen compensated by a bigger pie as changes boost Reit market

Published Fri, Oct 10, 2014 · 09:50 PM

Singapore

RESPONSE by analysts and the industry to the real estate investment trust (Reit) reforms proposed by the Monetary Authority of Singapore (MAS) on Thursday was a mixed bag of opinions, but the general consensus was approval and praise.

For instance, analysts have highlighted that large sponsors such as ARA Asset Management, CapitaLand and the Mapletree group could be the most impacted by the proposal to do away with acquisition fees, and just have them be paid a sufficient fee to recover their acquisition costs.

"ARA's performance fees and acquisition fees accounted for 15 per cent and 8 per cent of its 2013 revenue respectively," noted UOB-Kay Hian in a report.

DBS said in another note: "These proposals, when passed, could potentially have a detrimental impact on ARA, which is estimated to derive 55-60 per cent of its revenues from fees from its managed Reits... We might see earnings cut when (they ar…