US Reit unitholders urged to submit tax forms on time to help trusts preserve cash

UNITHOLDERS of real estate investment trusts (Reits) whose primary investment is US assets should submit the US withholding tax documents promptly to protect their interests.

If a unitholder fails to submit the relevant US withholding tax documents to their stockbrokers or nominee banks when requested, the Reits which have suspended or reduced distributions would be exposed to withholding tax that would otherwise not be payable, said Singapore Exchange Regulation (SGX RegCo) and the Reit Association of Singapore (Reitas) on Tuesday (Feb 27).

“When a unitholder returns the completed US withholding tax forms and certificates, principally the US Internal Revenue Service Form W-8, subject to validation, the Reit will not have to pay US withholding taxes on its suspended or reduced dividend distributions.

“This will help the relevant Reits to preserve cash amid difficult US market conditions, particularly in the office property sector, to meet loan repayment obligations, and to continue to reinvest in the properties,” said both regulatory bodies.

SGX-listed Reits with a focus on US assets, primarily commercial real estate, have suspended, delayed or reduced distributions amid plunging office values in the country.

Keppel Pacific Oak US Reit : CMOU 0% suspended distributions for two years and announced a recapitalisation plan to tackle its rising leverage and declining portfolio value, dragging the counter to an all-time low on its result day.

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Manulife US Reit : BTOU 0% is halting distributions until end-2025 after it breached debt covenants last year.

Prime US Reit : OXMU 0%, though not suspending distributions, slashed its H2 distribution per unit down 90 per cent on the year for deleveraging.