Singapore’s beloved REITs could see more growth on possible rule change

(Aug 2): Investors in Singapore’s much-loved real estate investment trusts (REITS) may soon have another reason to cheer, as the central bank considers looser debt rules that could spur more acquisitions by property managers.

The Monetary Authority of Singapore ended a one-month consultation period Thursday that looked into increasing the amount of debt that REITS can take on to 50% from 45% of their deposited assets. To minimize risks related to servicing the debt, the central bank also wants to introduce a minimum interest coverage ratio of 2.5 times, a measure that gauges firms’ ability to service debt.

Analysts said any changes to the leverage limit will allow REITs to gain easier and quicker access to funding for acquisitions, as debt is a cheaper and faster source of capital compared with equity. Singapore’s leverage limits for property trusts are among the strictest in the world, according to analysts.

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