- The MAS is proposing to subject all S-REITs to a minimum interest coverage ratio (ICR) threshold of 1.5x and an aggregate leverage limit of 50%. Managers will also be required to disclose sensitivity of ICR to change in interest rates and operating income.
Higher gearing limit, lower coverage floor
- - Read this at SGinvestors.io -
- We find the timing of proposal interesting: it comes on the eve of the reporting season and policy rates are expected to be cut. Or, is there more darkness before the eventual dawn?
Proposed rules
- The MAS is proposing a minimum ICR of 1.5 times is applied at all times to all the REITs. To simplify the rules further, MAS is proposing to simplify the requirements, MAS is proposing a single aggregate leverage limit of 50% for all REITs going forward.
- - Read this at SGinvestors.io -
- The minimum ICR requirement will not be considered breached if it is due to circumstances beyond the control of the manager. However, in such a situation, the REIT should not incur additional borrowings or enter into further deferred payment arrangements but can continue to refinance its existing borrowings.
How is it different from current rules?
- Read more at SGinvestors.io.
Above is the excerpt from report by Maybank Research.
Clients of Maybank Securities may be the first to access the full report in PDF @ https://www.maybanktrade.com.sg/.
Krishna Guha Maybank Research | https://www.maybank-ke.com.sg/ 2024-07-25
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