Last weekend, I just blogged about my interest in REITS (Real Estate Investment Trusts) and have my weekend reading of its basics (click here for my earlier post). I am still a few more chapters to go and will share my review of the book (Building Wealth Through REITS) soon.
Last night, saw an article shared by one of the well liked local retail investor-cum-blogger (I will not mention who) about the upcoming changes by MAS on REITS. So, decided to write a post about this.
Personally, I viewed these as positive proposed changes as it will give more freehand to the REITS managers in enhancing value for their unit holders. Of course, with more power, comes more responsibility (mainly at the investors' end) to sieve out the better REITS (I foresee that the REITS market will be more volatile after these changes are effected).
Here are some of the key proposed changes to REITS :
1. The Leverage Limit will be increased from 35% to 45% (the provision for REITs with credit ratings to leverage up to 60%, will be removed)
2. The Development Limit will be increased from 10% to 25%
3. REIT managers are to provide more comprehensive disclosure to REIT investors in the Annual Reports
4. REIT managers’ performance fees will be computed based on a methodology that primarily takes into account the long-term interests of REIT investors (this is to better align the interests between the REIT manager and REIT investors).
The MAS Consultation Paper is available on MAS website and if you can have comment, do send to MAS by 10 November 2014.
What is your view about this upcoming changes of REITS.
Cheers!
I think this is a good proposal move overall to align the corporate governance issue. The rest are pretty stacked and won't be much impact to the reits or investors itself I believe. Still a move forward rather than backward.
ReplyDeleteIndeed! Coupled with the upcoming board lot size reduction, it is definitely a plus point for small retail investor like me! Lol
DeleteEr... Channel news asia mis-quite MAS.
ReplyDeleteIt is a 45% gearing limit across the board, removing the 60% limit for Reits with rating. Meaning with rating, Reits can borrow up to 45% only.
15% more development is subjected to shareholder approval and only if the property is owned prior by Reits for 3 years and after development 3 more years
Read value buddies
Hi sillyinvestor, thanks for the additional points. I am sure there are more fine-print conditions when we read the consultation paper in more details!
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