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MAS is right to resist push for even looser leverage requirements for Singapore Reits

A more liberal regulatory stance towards these trusts – including the ones that are here just for the external manager model – may be a recipe for trouble

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Ben Paul

Ben Paul

Published Mon, Dec 2, 2024 · 05:00 AM
    • MAS says that its proposals for a minimum interest coverage ratio (ICR) of 1.5 times and an aggregate leverage limit of 50 per cent will be implemented, after receiving broad support.
    • MAS says that its proposals for a minimum interest coverage ratio (ICR) of 1.5 times and an aggregate leverage limit of 50 per cent will be implemented, after receiving broad support. PHOTO: BT FILE

    SOME respondents to the recent public consultation on amendments to the leverage requirements for real estate investment trusts (Reits) had a rather audacious request.

    They wanted volatility in foreign exchange and interest rates as well as tenant defaults to be considered as events beyond the control of a Reit’s manager.

    Reits have to maintain an interest coverage ratio (ICR) of at least 1.5 times, but this requirement would not be considered breached if a Reit’s ICR falls below the minimum threshold due to circumstances beyond the control of its manager.

    S-ReitsMonetary Authority of Singapore

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