MAS enhances REIT rule

By Tan Chee Yuen / Monetary Authority of Singapore | July 3, 2015 12:15 PM SGT
The Monetary Authority of Singapore (MAS) said it would implement several key measures to strengthen the REITs markets and safeguard unitholders’ interests.
The development limit of a REIT will be raised from 10% to 25% of its deposited property. In addition, the cap on leveraging will be upped from 35% to 45% of the REIT’s total assets. The changes will facilitate the rejuvenation of maturing portfolio of assets. Notwithstanding, the option to leverage up to 60% with a credit rating will no longer be allowed.
To improve the transparency of fee structure, MAS will require Managers to justify each type of fees charged. However, it will not intervene on the structure of fees or the types of fees incorporated.
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To strengthen corporate governance, interests of unitholders must be prioritised over the interests of the Managers and their shareholders, in the event of a conflict of interest. In the event unitholders do not have the right to appoint the Manager’s directors, at least half of the Manager’s board of directors must be independent directors. Managers will also be required to disclose their remuneration policy and procedures in the REITs’ Annual Reports.
According to MAS, these enhancements will be phased in to facilitate a smooth implementation by the industry.